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Thursday, 19 April 2012 16:35

Commbank's core tech protects jobs


Technology is one of the three pillars holding up the long term strategy of the Commonwealth Bank, according to the chief executive officer Ian Narev - and it, coupled with the productivity benefits that it underpins, means there's 'no need to send jobs overseas'.

Speaking at a strategy briefing in Sydney today Mr Narev said that the four year programme, employing 1,000 people to overhaul the bank's core banking platform, had placed the bank in a strong competitive position. He said that although the market conditions remained challenging the value liberated by technology and productivity improvements meant that the bank would not be offshoring any roles in the foreseeable future.

The CBA's core systems overhaul has been conducted in-house, and that focus on using home grown local skills will continue.

While Mr Narev acknowledged that he could see why some organisations would offshore he said that his experience with offshoring in the past was that there were often disappointments in terms of the labour arbitrage and service levels which were achieved, and that although the bank would always look at it, there were no plans to offshore any operations at this time.

Mr Narev said CBA would continue to look to technology, its people (and their productivity), and a strong balance sheet as the three pillars underpinning future strategy.

The bank has always claimed that its $1.1 billion core banking programme, overseen by CIO Michael Harte, which has seen it replace legacy with an SAP based platform would give it a competitive edge. Mr Narev today said that although other Australian banks could offer some of the real time banking functions in pockets (St George for example has long offered real time banking), he argued that none of CBA's competitors could offer real time banking across all their lines of business.

More than 10 million retail bank accounts have now been transitioned to the new CBA platform as well as all but a few businesses. He expected that transition would be complete by August or September.

Mr Narev said that the recent Easter holiday provided a good example of the new services that were now possible. Where a year ago, a business customer who had made a deposit on Easter Saturday would have had to wait until a batch process on Tuesday night to see the money appear in their accounts, that transaction had this year been completed in real time on Easter Saturday

'We have a high degree of confidence that benefits will be seen over time.'

He offered the example of the Kaching payments application, which has now been downloaded more than 100,000 times. Mr Narev said that applications such as Kaching demanded real time banking capability.

Without that banks would be forced to perform 'unnatural acts that will impose high levels of risk.'

He acknowledged the ongoing debate as to whether the same level of transformation could be achieved by focusing at the customer interface, rather than at the core system (this has been Westpac's approach for example) - but he argued that in the future it was quite possible that cash would be displaced by online payments, and that would demand banks invest in a modern real time core system.

Asked whether by investing in the SAP platform CBA was in fact establishing a new generation of legacy, Mr Narev said that this was not the case and the bank a 'vanilla solution with no tailoring.' While CBA was at the leading edge in terms of that SAP rollout, he said it was not a bespoke solution, but one which SAP would continue to develop and invest in.

As the bank concludes the CBA core rollout Mr Narev confirmed that there were no similar scaled technology programmes on the horizon, but that a number of smaller projects were envisaged. He gave no clue as to what they might involve.


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