Mahesh Sharma and Michael Sainsbury | August 07, 2008 | The Australian
THE National Australia Bank has lit the fuse on a five-year, $1 billion program to overhaul its technology platforms and will launch a major assault on internet banking in a bid to take market share from its big four rivals before the end of the year.
The move is part of sweeping changes to Australia's second-largest financial services group.
It is being pushed through the organisation by its board, which is led by Michael Chaney and last week appointed Cameron Clyne as chief executive from November 1.
NAB is the second bank, after the Commonwealth, to commit to replacing its 40-year legacy core banking systems, and the first phase of the project will deliver an online platform to a new business division, Star Direct.
NAB will spend about $30 million to launch a direct banking service, Star Bank, which will deliver customer services solely by internet and call centre.
Star Bank offerings will be launched later this year, with the aim of strengthening NAB in the direct banking market.
"We know there are customers more oriented to a direct branch service that is more innovative and direct," NAB retail executive general manager Andrew Thorburn said.
"This service will help us get to those customers."
Chief information officer Michelle Tredenick said the bank's systems weren't equipped to handle heavier workloads.
"Our platforms are able to deliver what we need right now but they're not sufficient to underpin our future growth strategy," Ms Tredenick said.
NAB has selected US software group Oracle to develop and deploy the infrastructure to support Star Bank over the next five years.
This is the first phase of the bank's plan to deploy next-generation platforms across the business.
Oracle will work with NAB to design and plan the two remaining phases of the core banking overhaul.
Earlier this year NAB finance chief Mark Joiner said the bank would spend about $1 billion overhauling its core banking platforms, and this would be included in its technology budget over the next five years.
Ms Tredenick would not disclose how much Oracle was being paid for the first phase and early development work on the billion-dollar project.
Oracle was preferred over Indian outsourcer Infosys for the job, and Ms Tredenick hosed down reports that there had been internal conflict over the contract.
"We've had all my business colleagues, a technology sub-committee chaired by Andrew Thorburn, and the board and group executives involved," she said yesterday.
"It has been an incredibly inclusive process and this is a unanimous decision.
"There has been no conflict in our organisation."
The Commonwealth Bank is several months into a four-year, $580 million core banking modernisation project to speed the development of new online products and their deployment to the market.
The bank declined to say what stage the project was at.
ANZ has announced an overhaul of legacy systems in its Asian operation, and their replacement with the Infosys Finacle platform.
It is planning to expand this platform to its local operations.
Westpac has said it will not rush into any project at this stage.
The second and subsequent phases of NAB's core banking overhaul will be rolled out in parallel. Planning for the following stages was expected to take another six months, NAB said.
The bank was using Indian outsourcer Infosys to introduce business process outsourcing as part of its sustainable outperformance strategy, Ms Tredenick said.
"One of our key sustainable outperformance strategies is to make sure we're very well buttoned up on our quality of service initiatives.
"As part of that we've been doing processing work with a number of companies, including infosys, and some of that has been business process outsourcing," she said.
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