Next Generation IT Platform (NGP) value will come: NAB

National Australia Bank (NAB) chief executive, Cameron Clyne, has sought to reassure shareholders that the benefits of the company’s Next Generation IT Platform (NGP) will come.

See more coverage on the National Australia Bank (NAB)

Speaking at the company’s 2011 results meeting, Clyne said the bank 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.

“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.”

Group Business Services group executive, Gavin Slater, also reiterated the multi-year, “multi-level” nature of the project.

“There is a lot of below the ground transformation taking place that will has a lot of customer benefit today as well as above the ground – the new functionality and capability that the customers see,” he said.

“But below the ground we have a huge transformation underway — your mainframes, servers and all of those — and as we replace those and configuring those that provides greater systems availability and capability as well.

“Our availability for our core channels like NAB connected business banking, ATMS, internet banking, is the highest it has ever been and that is a direct result of the transformation underway.”

Slater said the bank’s network transformation has now been completed and as a result, technology related incidents in the bank’s retail network and business banking centres had declined by as much as 50 per cent.

“Technology transformation is a little like building a house – you can’t put the roof one before you have built the foundations,” he said. “We have spent a lot of money, and there is better value in that, but in terms of visible value, that is coming later in the year,” he said.

Detailing spending for the year to 30 September 2011 in its annual report, the bank said it has increased its technology spend substantially — $719 million compared to $461 million for the September 2010 year — and had shed technology staff.

“Investment in infrastructure projects has increased by $258 million or 56.0 per cent since the September 2010 year, reflecting the continued focus on improving the quality, consistency and capabilities of the organisation to significantly enhance the customer experience,” the bank’s report reads.

According to the bank, most of the investment spend was made in the Group’s Next Generation Banking IT Platform (NGP) and the convergence of key technology and operational infrastructure.

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

Full time equivalent employees (FTEs) also fell during the year with the company reporting that total FTEs fell by 533 on the September 2010 year.

“The decrease has been driven by a continued focus on efficiency programs and the outsourcing of some technology functions to IBM,” the report reads.

“Convergence activity has been implemented across the lines of business. As a result, a new operating model has been implemented that requires functions to be focused on improving the quality, efficiency and capabilities of the organization to enhance the customer experience.”

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