Web 2.0? Don't bank on it just yet

AUSTRALIAN bank infrastructure is "not robust enough" to deliver secure web 2.0 banking and financial services.

That's the warning last week's Future of Banking and Financial Services event in Sydney heard but demand and overseas influence will change how banking is done, delegates were told.

Bank of Queensland chief information officer Iain Blacklaw said such plans captured the imagination but for his bank web 2.0 is "at the furthest edges of the radar screen".

Compared to call centres, ATMs or eftpos "internet banking is the most pervasive but with the least stability. I wonder if the next generation has exponentially more risks?"

He said "Australian banks are not robust enough at the infrastructure level" for the financial services explored overseas where they use wikis - collaborative websites - that invite customers to participate in financial product design.

Wells Fargo built a bank in the virtual world of Second Life and, closer to home, AMP is testing an online environment where customers use avatars - virtual representations of themselves - to try products.

Some commentators believe new classes of financial services will emerge, such as the peer-to-peer lending pioneered by zopa.com.

Executive general manager of IT and management services at Challenger Derek Goh and Goldman Sachs JB Were CIO Richard Tait said that web 2.0 services for Australians were far off.

But Mr Tait said some collaborative tools were good for the bank's use.

"(We are) trying to get people to collaborate and come up with things that will make a lot of money," he said. But legal obligations could stymie some information-sharing tools.

Geoff Wenborn, general manager of technology and innovation at NAB, said banks could not afford to ignore customer expectations of interactive banking tools.

"We have to be able to invest in and provide a robust and secure back end while meeting our regulatory obligations (and) making it open and easy to use.

"It is an enormous challenge," he said.

It is a challenge that Michael Neary, Telstra's enterprise and government industry director, said the finance sector must tackle because there was a sea change in consumer expectations.

"Banking was once a place you go, now it's far more a thing that you do," Dr Neary said.

Telstra research found 4.95 million Australians wanted access to mobile banking services and the mobile phone may replace card payment systems, he said.

Next year's Telstra pilot with Visa and NAB demonstrated at the conference will have about 250 Melburnians use their mobile phones to pay for items less than $35. This sort of payments system was also in demand overseas: Japan has 43,000 terminals that takepayments from mobile phones, Dr Neary said.

But the shift to new technology will be hampered by the skills drought.

Many financial institutions at the conference said it was difficult to find and keep IT staff but they were divided as to whether offshoring was the best solution.

Suncorp CIO Jeff Smith - overseeing the $355 million two to three year program to integrate Suncorp and Promina's information systems - was a DIY proponent. "We aim to have as much in-house as possible," he said, adding that intellectual property was among a bank's greatest assets.

He said offshoring did not lend itself to supporting more agile organisations where there were six-month projects and smaller teams, which was increasingly the case in the financial sector.

Like Suncorp the Bank of Queensland keeps as much IT work as possible in Australia.

And although his was part of a global organisation, Mr Tait claimed that "offshoring is not part of our agenda".

"If we are not sitting on the same floor as the business guys as they are thinking things through then it's a problem," he said. Being even a floor above or below the business team could lead to a mismatch between IT strategy and business plans, he said.

And he questioned the wisdom of more offshoring.

"The real issue with offshoring is are we cutting off our feeder stock for IT management?

"It could be a significant issue for us."

Beverley Head
October 30, 2007

This story was found at: http://www.theage.com.au/articles/2007/10/29/1193618795944.html