Thorburn to shrink NAB's big bang tech revamp

Beverley Head
NAB boss Andrew Thorburn yesterday sounded the death knell for banking's billion dollar computing blitzes, instead signalling a more iterative approach to technology rollouts.

A year ago NAB's then CEO Cameron Clyne said everything was on track with the bank's ten year NextGen technology revamp designed to replace 10,000 pieces of equipment, transition to a new data centre and launch a new payments system by 2016. His successor yesterday said that the overhaul had "taken too long and cost too much," and that a thorough external review of the initiative was continuing.

Thorburn yesterday said the bank needed "to do things differently and make changes so we get smaller and more frequent drops of technology" describing smart technology investment as "more a sprint than a marathon."

Responding to an analyst's question he said: "We have learned that we can't run multi-year commitments on technology projects …we have to focus on a few things that are significant and do them well."

He said that NAB had not always got its technology sequencing right and that risked "mayhem" for its front line staff.

Shortly after Thorburn took over as CEO, Lisa Gray (who as group executive of enterprise services and transformation had oversight of the NextGen programme of work) was replaced by Renee Roberts, previously head of risk at the Bank of New Zealand.

Thorburn acknowledged the importance of robust and digitised banking platforms, noting that NAB was building its new platform "slowly but surely." So slowly in fact that the bank looks like being shackled to most of its remaining legacy platforms until at least 2017 according to yesterday's presentation.

Although the bank has this year introduced a new credit risk engine allowing 37 legacy servers to be decommissioned, NAB yesterday indicated that the wholesale decommissioning of remaining legacy platforms would not take place before 2017.

The current technology priority for the bank is the Personal Bank Origination Platform scheduled for roll out during 2015/16. This is intended to simplify interaction with the bank for trusts, sole traders and individuals.

Thorburn also highlighted the NAB Connect, NAB View and NAB Now initiatives.
NAB Connect refers to the bank's internet and mobile banking systems which were upgraded this year.

NAB View is a customer relationship management platform providing bankers (2,300 now and 4,500 from 2015) with access to aggregated customer information sourced from 12 million customer records. NAB Now is a smartphone and tablet based point of sale solution for small businesses that will be rolled out next year.

While these point solutions are important in terms of maintaining the bank's ability to compete with both traditional financial sector competition and technology fuelled payments disruptors, Thorburn acknowledged that the bank still had to "migrate customers to the new platform…and retire legacy systems to take cost and complexity out of the system."

Earlier this month NAB revealed it was taking a $297 million software impairment charge which has taken its capitalised software balance to $2.16 billion. It hinted that might rise in the future with depreciation and amortisation costs tipped to increase by a further $50 million.

Thorburn, however, dismissed suggestions that NextGen may take more of a hit. "If we felt we needed to have a write down on NextGen we would have done it."

The bank said that it had set a target that software capitalisation would peak at around $2.5 billion, but as Craig Drummond, group executive finance and strategy, admitted "frankly who knows three, five, seven years out about our priorities."