Published on the 20/08/2013 | Written by Newsdesk
Reporting a record A$7.82 billion profit last week, the Commonwealth Bank signalled how judicious technology investment can deliver a competitive edge – but sustaining that requires more…
Over the last six years Commonwealth Bank spent $1.1 billion and deployed a team of 1500 people led by chief information officer Michael Harte to rip out 40 year-old legacy systems and replace them with a state of the art SAP-based core banking platform. With that revamp completed during the last financial year the bank, which migrated 14 million accounts over to the new system, is now focused on leveraging the investment.
According to CEO Ian Narev; “We’ve now got an engine that’s enabling us to do things that others we don’t think can do as effectively. The one thing I will say about the core banking investment at 16 percent (of total investment in 2012/13) is that six years ago we made a multi-year commitment and pretty much come hell, shine or whatever it was going to be, we were going to keep doing that because you don’t pull out of a project like that in midstream. What we do have obviously now is a bit of flexibility.”
While CBA is acknowledged as a technology leader in the financial sector it predicts stiff competition from traditional financial service providers and new players equipped with technology-enabled business models. The other three major Australian banks, NAB in particular, Westpac and ANZ are no slouches when it comes to technology spending while challenger brands such as Credit Union Australia and online-only banks including ING Direct and NAB’s UBank continue to compete aggressively.
CBA’s challenge will be to run faster than its rivals with regard to innovation. Narev said that in the future the bank would be “innovating at the edge”.
He said that mobility offers the greatest technology opportunity for banks in the future – noting that without a new core capable of transacting in real time it would not be possible to deliver the sorts of mobile applications that made sense for its customers. Again, it can’t expect the market to itself, on his first day in the job the incoming CEO of AMP, Craig Meller, signalled mobile applications as the new financial frontier.
Commonwealth Bank has already racked up 2000 activations for its CommBiz mobile service, and a million downloads of its Kaching mobile payments system used to process more than $9 billion worth of transactions thus far.
