Westpac is pinning its hopes for re-energising its business on a technology simplification program, Project Unite.
The bank will commit around 30 per cent of its annual investment spend of A$1.8 billion to $2 billion (which stretches out to 2027/28) to the project.
Unite spans 85 initiatives that will eliminate technology duplication in the group by cutting the number of platforms from 180 to 60.
Westpac chief executive Peter King said technology duplication adds to the cost of running the bank, makes change slower to achieve and creates complexity for staff and customers.
King said the time is right to launch Unite because the bank has completed the sale of non-core businesses and completed its CORE program, a years-long risk management upgrade.
Westpac management is hoping Unite will be circuit breaker for a bank that reported flat revenue, rising operating expenses, a falling margin and modest growth in lending and deposits.
The bank reported net profit of $3.34 billion for the six months to March – a fall of 18 per cent compared with earnings of $4 billion in the March half last year. Net interest income of $9.1 billion was unchanged from the previous corresponding period and the net interest margin fell from 1.96 per cent in the March half last year to 1.89 per cent in the latest half.
Operating expenses of $5.4 billion were up 8 per cent from $4.9 billion in the previous corresponding period. The cost to income ratio was 50.9 per cent – up from 45.3 per cent in the previous corresponding period.
Westpac has the highest cost-to-income ratio among its peers, which is something King would like to change.
The Australian housing loan book grew 5 per cent year-on-year to $495.1 billion. The business loan book grew 9 per cent to $181.9 billion. Westpac chief executive Peter King said the bank is looking to grow Australian mortgage at around system, while it aims for stronger growth in higher margin business and institutional lending. Customer deposits grew 4 per cent to $650.9 billion.
The bank has been working on technology simplification for a couple of years but Project Unite, which was launched in March, represents a significant acceleration. It featured prominently in the presentation of the bank’s March 2024 half results yesterday.
Projects completed to date include reducing the number of platforms used by bankers to assist customers from six to three, cutting the number of customer onboarding systems from 11 to one and consolidating nine communications networks into one.
The key projects for the current financial year include reducing the number of Australian customer master files from three to one, consolidating 22 retail electronic identity verification processes into one system and trimming collections systems from seven to one.
Future projects include cutting the number of contact centre platforms from 12 to one and consolidating 15 workflow systems into one.