NAB: Tech investment paying off

Process simplification around the bank’s ICT has helped underpin significant increases in customer satisfaction

The National Australia Bank (NAB) has again moved to reassure shareholders that its investment in its Next Generation Banking IT platform (NGP) is paying off.

Commenting in the bank’s March 2012 Half Year report, CEO, Cameron Clyne, said ongoing process simplification around the bank’s ICT had also helped underpin significant increases in customer satisfaction.

“The transformation of the Group’s technology operations environment gathered momentum and is on track to deliver improvements in cost efficiency and a reduction in operational risk,” the commentary reads.

“Notably, the Group’s Next Generation Banking IT platform has successfully implemented a major foundational release of a broad set of underlying application components.”

In October Clyne also sought to reassure shareholders that the benefits of the company’s Next Generation IT Platform (NGP) would come stating he was “very comfortable” with the progress of the functionality delivered on the platform.

We have called out that it is a multi-year program,” he said at the time. “We have taken a deliberate approach of spending the initial [investment] money on the infrastructure layer.

“You have to have a solid foundation and we have prioritised things like financial systems… credit risk, a securitisation platform, and those sorts of things which are critical. You have to do them at some point…We are very pleased with the progress.”

According to the 2012 Half Year results, investment in infrastructure projects increased by $4 million or 1.3% compared to the March 2011 half year. Most of this investment went toward the bank’s NGP and the convergence of major technology and operational infrastructure.

“The Group maintains a continued focus on improving the quality, consistency and capabilities of the organisation to significantly enhance the customer experience,” the report reads.

“Other key investment activities include large-scale upgrades to technology infrastructure and the ongoing refurbishment and relocation of stores and partner sites in Australia and New Zealand.”

The report also noted that the bank’s NAB Wealth business continued to invest in its customer-facing technology and back office infrastructure.

“Activities in Wholesale Banking include the continued development of software platforms to assist in achieving cross-sell,” the report reads. “NZ Banking activities include the enhancement of banking services and improvements to NZ Partners’ products and services.”

According to Clyne, cost growth was managed to below revenue growth in spite of subdued market conditions and the bank’s ongoing technology investment program.

“Good progress has been made in the Group’s technology transformation and its initiatives to enhance its reputation and further differentiate itself from industry peers,” Clyne said in the report’s CEO commentary.

The chief executive also singled out the benefit derived by the bank’s NAB Wealth business.

“The level of claims improved over the half year following investments in technology and claims management resources,” the commentary reads.

“The Investment Platforms business was strengthened by the refresh of the core MasterKey Fundamentals offering and the migration of MasterKey Custom to the new discretionary investment platform, MLC Wrap.”

In the area of full time equivalent (FTE) employees, the March 2011 Half Year report also noted a decline in FTEs within its Wholesale Banking business of 186 during the March 2012 year compared to the March 2011 half year. These job losses were based on efficiency savings across support functions and technology and operations. The decline in jobs was partially offset by investment in front office roles, according to the bank.

For the March 2012 half year compared to the September 2011 half year, wholesale banking FTEs decreased by 70, due to efficiency savings across support functions and technology and operations, and again, partially offset by investment in front office roles.

In January the issue of job cuts in the banking sector raised its head with reports that Australia’s banking sector was preparing to shed some 7000 jobs in the next two years.

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