ANZ Bank says no business case for core banking IT overhaul


blog Those of you who have been Delimiter readers for several years will know that the ANZ Bank has not precisely covered itself in glory in the march to reform core banking IT systems. While the Commonwealth Bank has been engaged in stealing a march on the rest of Australia’s banking sector through its landmark Accenture/SAP-driven overhaul and Westpac and NAB have been trying desperately pushing their own comparable projects to catch up, ANZ has sat on its hands.

Last week the Financial Review reported from the sidelines of a Pegasystems conference in Las Vegas that ANZ was still refusing to remediate its ageing core IT systems. The newspaper wrote (we recommend you click here for the full article):

“ANZ Banking Group chief information officer Scott Collary says there’s still “no compelling business case” for the bank to invest $2 billion and spend five years performing a core IT systems overhaul.”

It’s an easy statement for Collary to make; and of course there is some logic to the CIO’s argument. It’s true that ANZ is able to innovate at the customer user interface layer while leaving its core IT systems untouched, by developing its mobile apps and pushing new products through its website. This is a basic for any bank in 2016.

However, it’s also true that ANZ’s systems are, right now, fundamentally incapable of the same speedy transaction processing as those of the Commonwealth Bank, which have accelerated to (according to my own experience as a customer) near-instant speed. CBA calls it “real-time”, and I’m inclined to agree.

As a small business owner, I constantly hear from other small business owners that everything they do with the Commonwealth Bank appears to have sped up over the past few years. Payments come and go much more quickly, and the Commonwealth Bank appears to be constantly adding new features onto its banking platform that the other banks don’t. The net result is that they have better access to more money and can do more with it, plus less frustration at having to “wait” for processing delays.

This all adds up to a noticeable impact on the overall speed of conducting business. For any type of business, this matters a great deal.

Right now, there is a ‘halo’ effect that surrounds CommBank’s core banking overhaul project that gives strong credence to the business case for its first mover advantage in the core banking IT race. I’m not sure that ANZ really understands just how powerful this overall effect can be. If it did, I would suspect it would be quite worried indeed.

Because the longer ANZ delays this, the further behind it will fall, and the harder it will be to catch up. That’s the problem with Collary’s statement: It may be correct today. But it may not be correct in a year’s time; and that will be much too late.

It bears remembering that Australia’s banks, in 2016, are essentially highly sophisticated software houses. And if there is one thing that we know about software, it’s that it gets out of date real fast.

Image credit: ANZ Bank


  1. ANZ dragging their feet makes Apple Pay (and Android Pay, presumably) painful to use too in comparison to other banks/issuers (so, American Express here in AU). With Amex, you get real time notifications pushed to all your Apple Pay devices after using the card (no matter how you actually use the card, whether via Apple Pay, or on the internet).

    ANZ can’t do this, and at best you only get a local notification on the device you used Apple Pay on, and then you have to wait ~5 days for the payment to be processed and then actually appear in their mobile banking apps. Heck, I can’t even see pending transactions made with my ANZ credit cards.

    While Apple Pay (and Android Pay) helps make ANZ more appealing for technology savvy customers (who aren’t already customers at least), it definitely is a shock trying to use my ANZ cards after using products from other banks, like CommBank.

    • I think people who have not used CommBank in the past three years just do not understand what a modern bank is. Going back to another bank is like using something from the 1990’s — their websites really are that bad. I take CommBank’s innovation for granted these days — don’t know how I could run my business without it.

      • I’m no fan of CBA but I agree here.

        Especially the integration with Xero and their Android app.

    • The lack of real time updates is the reason I moved from ANZ. Not being able to see credit card transactions for days and sometimes weeks is a joke. CBA and even to an extent Westpac have this real time. While ANZ can innovate at the presentation/engagement layer, their core systems let them down from the total customer experience point of view.

    • But will the banks’ IT systems actually be able to keep up? I suspect not. There is still a lot of overnight reconciliation going on out there. Archaic.

      • Core banking has nothing to do with payments systems or card transaction systems. They are totally different things. Core banking systems handle products like mortgages, deposits, personal loans etc.

        It is interesting that you mention CBA – their payment system is known in the industry for being flakey and going down at peak periods.

  2. Look at Fifth Third Bank’s approach to COTS vs bespoke technology: for years they ran a home-grown core banking system (in IBM mainframe Assembler) along with home-grown database and TP monitor software. When I was there (early 2000’s) I was appalled!
    Scott spent many years there and learned the good and bad side of “very” legacy apps.

    Contrast that with NAB (with whom I also worked long ago) Their CIO was a fan of COTS and standardized apps.

    Before NAB & 53 I did work for/with Citicorp, and they too loved their heavily customized bespoke software.

    People’s experiences shape their behaviors, for good or ill.

  3. Are CIO’s scared to do major overhaul during their tenure?? ensuring to complete their tenure with minimal risk.

    Nobody will wait to get into a problem situation and then fix the core banking. Today is generation where everybody wants to identify problem before they happen and hence moving to implement AI solutions to aid in this. ANZ needs to seriously rethink about their strategies before it is late to recover.

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