It’s taken a while, but the Commonwealth Bank of Australia’s ambitious project to overhaul its core banking system finally has a rival, with National Australia Bank flagging plans to rapidly increase the pace of its own core overhaul — with a key tranche of the project to be delivered by the end of this year.
NAB’s core overhaul — dubbed NextGen for ‘Next Generation Platform’ — has been in the works since at least August 2008, when the bank announced it had picked Oracle’s i-Flex platform as the centrepiece of its banking operations moving forward. However, unlike CommBank which has conducted the equivalent of an open heart transplant to replace its core with SAP technology over the past several years, NAB chose to dip its toe in the water first, rolling out the technology in its UBank online brand first to get some early lessons.
But yesterday, the bank made it clear that it was now accelerating the project to light speed.
In briefing documents associated with its results session, the bank indicated that it had defined the targeted operating state for NextGen, was building the platform, and had already activated some of the new platform’s functionality — such as customer analytics tools.
In 2011, the bank noted, it would deploy what it described as the “foundation release” of NextGen, as well as making a new general ledger system operational and deploying extra capability through the program into its securitisation platform.
The move represents one of the first concrete reactions by a rival bank to CommBank’s very public claims over the past year that it was stealing a march in terms of its technology platform over its competitors, through the deployment of so-called ‘real-time banking’ in its core. Neither ANZ nor Westpac have confirmed plans to overhaul their core banking systems in Australia, although ANZ is reforming its platforms internationally.
As part of its ramp-up effort, NAB yesterday revealed costs had risen in a number of areas — including general expenses, an area where it specifically mentioned NextGen was contributing to costs.
The headcount in its Group Business Services division — which includes its technology support arm — has grown substantially recently by 948 full-time equivalent roles, net of the bank’s outsourcing agreement with IBM inked last year. Overall computer costs were $202 million for the past half-year — up from $163 million for the same period 12 months ago. Software costs were also up.
In a broader sense, NAB also has a fistful of other major technology projects on the go.
For starters, the bank noted yesterday that it has upgraded 28 percent of its sites as part of a wide-reaching network modernisation project. No further details about the project were available, and the bank wasn’t able to comment this morning on which vendors are involved. The project is slated to be completed in 2011.
Also on the plate this year are an upgrade of the bank’s contact centre voice telecommunications infrastructure and a project to transform its payments systems, for example. NAB has also completed the integration of the technology systems belonging to insurance acquisition Aviva.
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