Defence Bank looking beyond the wire and ready for NPP

When it comes to IT spend, the cost should not be measured purely according to an economic criteria, suggested Jon Linehan, chief executive of Defence Bank, in a presentation at CeBIT last week.

Addressing an audience of fintech professionals at the technology expo in Sydney, Linehan said: "It should be as much about solving problems, with less time and management effort wasted on administration."

A flat management structure allows less concentration on bureaucracy, and Linehan went on to point out that in this is one area where smaller banks (like his) had an advantage over large competitors.

"If you look at CBA with 60,000 people, that's as large as a city and cities are hard to regulate," he said.

Linehan explained that expanding its branch network was part of its plan to extend beyond "the wire" of Defence Force establishments, an important part of its strategy to access new funding and be relevant to a wider customer base.

Superannuation is a classic example," he said. "Defence Force personnel get access to government superannuation, so that's not our market. We have to look outside [Defence] for superannuation money.

This has been done in part by using an RSA structure, which allows investors to access term deposit-type returns with the protection of superannuation rules, giving tax protection for pension returns.

All the same, Defence Bank is on the lookout for new customers. It is also launching its second "branch of the future" (showcasing a range of new technology) in Townsville, where there is also a very large Defence presence.

Linehan said Defence Bank did not have the legacy issues that the big banks, for example, have with their older platforms.

By sharing back-end platforms with large players such as Cuscal, the bank is able to concentrate on developing the interface technology - such as mobile banking apps - that attracts its core customer base.

Linehan is confident that this model will ensure that Defence Bank is ready to go when the New Payments Platform goes live.