Westpac has launched an ambitious upgrade of its technology simplification program in a bid to improve customer outcomes and bring its cost-to-income ratio down to the level of its better performing big bank competitors.
The bank will commit around 30 per cent of its annual investment spend of A$1.8 billion to $2 billion out to 2027/28 to Project Unite – 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.
As an example, he said the cost of implementing open banking was about 30 per cent higher than budgeted because of system duplication.
“We have more technology than we need,” he said.
King said the time is right to launch Unite because the bank has completed the sale of non-core businesses and it is close to completion of its Core program, a years-long risk management upgrade overseen by APRA.
The bank has been working on technology simplification for a couple of years but the announcement of Project Unite represents a significant acceleration.
Westpac chief information officer Scott Collary said project completed to date include reducing the number of banker platforms 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 consolidated 15 workflow systems into one.
Collary said most of the platforms that will be used in future are already in place, although there will be some system building. The bank will rely on existing partnerships to deliver the projects.
Accenture has been hired to assist with project governance.
Chief financial officer Michael Rowland said the reduction in cost-to-income would come from efficiency benefits and a reduction in the cost of implementing changes.
Westpac’s cost-to-income ratio was 49.4 per cent in 2022/23 (47.5 per cent excluding notable items), compared with 43.7 per cent for NAB and 49.6 per cent for ANZ in the same period. Commonwealth Bank reported CTI of 44 per cent in the December half.
Rowland said most of the spend would be expensed and this would be a headwind for expenses in the early years of the project.
Asked if the bank would remain committed to the project in the event of a change of CEO, King said Unite was an organisational priority from the board down.
Asked if the plan included a new core banking system, Collary said: “We are looking at improving customer outcomes, simplifying things for our bankers and cutting costs. Most of that is outside the core.
“Core systems are not big drivers of these issues. The core will be addressed at the end of this.”