Curran delivers 'Kodak moment' warning

Australian banks need to reinvent themselves or brace for their own "Kodak moment" according to Westpac's chief information officer.

Dave Curran, speaking at the FST Media Future of Banking and Financial Services conference in Sydney yesterday, said the financial sector was now at a "crossroads" and the pace of technology driven change meant; "If we are too slow we will miss out...think Kodak."

"Over the last ten years we have been more reactive and not acted with the urgency required.

"Banks need to make a step change. We have to be our own disruptor," he said, warning that a chasm would emerge over the next five to ten years between banks which could and did change, and those which failed.

He did, however, suggest that in some areas established banks were still being protected from over-the-top disruptive competition by regulation, capital requirements and trust and reputation related issues.

While financial sector disruptors were fast emerging, he said that, "to create a large scale bank with 10 to 20 million customers takes time. And regulation cannot be underestimated."

Just developing the information systems needed to ensure regulatory compliance would chew up a sizeable portion of even Westpac's IT budget next year, he said.

This, he said, would make banking a relatively "sticky service" for some time to come, although he acknowledged that competition was fierce in the area of payments thanks to a relative lack of regulation and low capital requirements.

John De Angelis, IT director of shared services at AMP, who also spoke at the conference, agreed that the regulatory hurdles surrounding many financial services could make it difficult for start-ups to carve out much of a niche, and argued that the multi-channel approach of companies such as AMP could make it harder again for new entrants to compete.

However he acknowledged the financial services ambitions of other large companies such as Wesfarmers, which he said was looking at developing more of a "Tesco model."

The UK the retailer offers a growing range of financial services, as does Wesfarmers' grocery chain Coles.

While he mused, "maybe we can use the regulatory environment ... because that makes it difficult for small start ups," De Angelis acknowledged that "The bigger threats are the Wesfarmers of the world."