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CBA bets on cloud and innovation

Commonwealth Bank is finalising a flurry of new technologies including mobile and social network applications aimed at both consumers and business customers, and preparing to migrate the commbank.com website onto the Amazon cloud before Christmas.

From early January Commonwealth Bank will make its Kaching payments application available inside Facebook which will allow people to make or request payments to and from Facebook friends, and complete the payments loop without ever leaving the social network. Backed by what Andy Lark, chief marketing and online office described as a “100 per cent security guarantee,” the payment loop will be completed using CBA’s Netcode SMS service which will require payers and recipients to enter a verification code to complete the transaction.

Mr Lark said that the only reason CBA had been able to deliver the Facebook system and security guarantees was because the bank had completely transformed its back end systems.

Chief information officer Michael Harte, who has overseen a $1.1 billion core banking overhaul of the CBA, remains at pains to explain the competitive advantage that he believes the overhaul has delivered to the bank. Speaking at a media briefing in Sydney today Mr Harte acknowledged that the “intelligentsia” was still divided over the relative merits of the four big Australian banks’ approaches to technology refreshes.

But he argued that only by fundamentally re-architecting the information technology platform could a bank expect sustained and affordable competitive advantage.

He defined competitive advantage as; “Those assets that you own and control that are sustainably different from the competition.” For the Commonwealth Bank he said the most obvious example of competitive edge was its CommSec platform.

He dismissed as “window dressing” some of the innovation being rolled out by rival big banks. Mr Harte said that; “The cost of computing is eventually too high and too complex to support if you take a front-end only approach.”

A regular and loud advocate of cloud computing Mr Harte also seized the opportunity to extol the financial benefits of cloud computing. By Christmas the majority of commbank.com will be hosted on the local instance of the Amazon public cloud using an Adobe Content Management system.

Mr Harte said that he believed cloud computing was valid for banks as long as it met all the data sovereignty and security expectations; “And our security requirements are more stringent than government departments,” said Mr Harte who stressed that no customer data would be stored in the cloud.

He said that it was possible to achieve savings of up to 40 per cent in the cloud, and that some cloud based platforms could be rolled out for a tenth of the cost “of trying to do that internally with our own capital.” He said that where it used to take eight weeks and cost thousands of dollars to provision a server on premises for applications such as test and development, that now took 8 minutes and cost 25 cents.

Mr Harte exhorted other enterprises to “stop hiding behind all the old excuses. The faster people get into it…the more stable the digital economy will be.”

 While CBA has invested heavily on its back end, it has not neglected the front end, and today announced that it had also revised its Kaching app for Android devices with a new version being launched in mid December. What is still missing however is the Near Field Communications capability which would allow Android phone users to make contactless payments.

CBA has introduced an NFC enabled case for iPhones which allows contactless payment - the bank is also planning to release a new  NFC case for the iPhone 5 – but no such case has been released for Android phones – largely because of the multiple different form factors of Android phones.

However many Android mobiles feature NFC capability. While Westpac and the ANZ have announced trials of contactless payment systems using Android phones – in most cases involving writing bank data to the secure element of the SIM card, Mr Lark said that he was hopeful of working with phone manufacturers to be able to have access to the NFC chip itself rather than using the SIM card which might tie customers to a particular telecommunications carrier.

Kelly Bayer Rosmarin, executive general manager for corporate banking solutions for CBA, also outlined two new business services which will be released in early 2013: SmartSign which will allow customers to remotely and digitally sign an application for asset financing, and CommBiz Mobile.

SmartSign is backed by additional security provided through a biometric voice print capture – the bank’s first foray into voice biometrics. Ms Bayer Rosmarin said the voice print would help authenticate the user – and could also be used as evidence in case of dispute.

The bank also provided an update regarding its point of sale initiatives.  It has now made the Leo portable point of sale device widely available, with the tablet Albert device still slated for release in mid 2013.

Ms Bayer Rosmarin claimed that 500 businesses and 700 developers had signed up to use the Pi development platform which the bank has selected as its point of sale platform for the future.


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