news ANZ Bank this morning revealed it had signed a $450 million deal with global technology firm IBM that would allow the bank to access all of IBM’s technology and feature an ‘Innovation Lab’ to more rapidly bring new products and services to market.
In a statement released this morning, IBM said the partnership would provide ANZ with “increased capability to drive productivity and innovation” across its operations, as well as improving its capacity to deal with the rapidly growing number of customers and transactions across the bank’s branch, digital and mobile channels and support ANZ’s regional expansion.
The agreement includes access to IBM’s software portfolio, cloud development capabilities and core systems infrastructure. It will provide common platforms across ANZ’s network as the organisation continues to grow as a super-regional bank across Asia, and will allow ANZ to deliver what it described as “a more integrated and innovative banking experience for digital customers”.
An essential pillar of the strategic agreement, according to IBM, is the Innovation Lab, a co-investment between ANZ and IBM. The lab will allow ANZ to increase productivity, to deliver new products and services to market quickly and improve the customer experience.
The Innovation Lab is powered by Bluemix, IBM’s cloud development platform-as-a-service, and will enable ANZ’s developers to build, test and deploy new applications and services at “a fraction of the time and cost previously taken”.
IBM will also deploy its newest z13 mainframe and POWER8 infrastructure as part of what it described as “ANZ’s private cloud environment”.
IBM said its catalogue of integration, content management, data, analytics and cloud software will support ANZ’s core banking and infrastructure needs, and will help the bank gain deeper insights of its nine million customers worldwide to better serve their needs.
ANZ chief information officer Scott Collary said in IBM’s statement: “Understanding our customers’ needs and preferences around mobile and digital banking is critical to our business and to providing a superior customer experience. We therefore need to ensure we’re meeting these needs in an innovative, consistent and seamless way and with this partnership with IBM, we’re working to achieve this goal.”
“For more than forty years IBM has been a strategic partner of ANZ and delivering innovation in customer service is at the forefront of our partnership,” said Scott Barlow, IBM Client Director for ANZ Bank. “This new agreement continues to build on this by enabling ANZ access to an arsenal of leading edge technology to provide the agility, speed and innovation essential in the rapidly changing financial services marketplace.”
I have to consider this deal relatively unusual in the context of major IT contracts with banks.
Usually such contracts are based around outsourcing of IT services. We’ve seen this repeatedly in Australia over the years. For example, in 2012 ANZ shifted some 260 development testing staff to Capgemini.
Alternatively, sometimes we see major contracts signed between the banks and companies such as Oracle and CSC, which cover major core banking upgrade projects.
However, this agreement with IBM appears to be primarily based around the provision of IBM’s software and hardware platforms to ANZ, rather than focused on IT services or featuring a major core banking upgrade per se.
What this tells me is that ANZ is undergoing substantial technological change within its operations on both a hardware and software front, but without substantially changing the way it provides IT services or upgrading its ageing core banking platform (it currently appears as though ANZ may be the last of Australia’s major banks to undergo that complicated process).
It looks as though ANZ is seeking to both substantially upgrade its existing hardware platform (including through the use of mainframes), while also rationalising and consolidating a number of its software platforms using IBM software, and seeking to shift its development operations onto more agile, cloud-based infrastructure.
It’s hard to view all this as being anything less than overwhelmingly positive, and I suspetc it will lead to a redevelopment of ANZ’s core down the track. However, it still does leave the core banking platform upgrade question hanging over ANZ’s head in the long-term. Real-time banking and very agile financial services product development are now real concepts in Australia’s banking sector. Will ANZ be able to keep up with rivals like CommBank?
Image credit: ANZ Bank