The billions of dollars invested in the Commonwealth Bank’s (ASX: CBA) Information Technology since 2006 have effectively lifted the bank to “world-leading” status, according to the bank’s chief information officer (CIO), Michael Harte.
Speaking at an analysts and media presentation on the IT transformation, which coincided with the launch of a new marketing campaign and brand image for the bank, Harte said the transformation had enabled the bank to allocate more of IT investments toward new services, products and capabilities.
“Five years ago approximately 50 per cent of our total IT spend, that is $800 million dollars, was dedicated to infrastructure,” he said. “Half our spending went towards the cost of doing business and conferred no strategic advantage. Today the ration of IT expenditure on business services versus infrastructure is 74 to 26 per cent.
“The reallocation of capital away from infrastructure means we can deliver innovative services that add value to our customers.”
According to Harte, these services included upgrades to NetBank, an online vault service for digital assets, instant online account opening, faster credit card approvals, instant overdraft decisions, and a click to chat service for online customer advice.
Consolidation of infrastructure as part of the modernisation project had also brought many benefits.
“We have reduced the number of data centres from 23 to two, we have converged branches, ATMs and call centres onto a single IP network, and we have improved reliability tenfold – in the last six years we have seen the number of severity one outages down from 70 to seven.”
Despite the bank’s ATM and Eftpos network crashing nation-wide in February, the bank was now aspiring to five nines, or 99.999 per cent, availability for its services, which translated to no more than five minutes of downtime for customers per year, Harte said.
The bank’s investments in IT were also returning financial gains, Harte said. By way of example, the CIO cited the $80 million annually the bank invested in its NetBank platform which returned $4 billion in sales annually.
Some $10 million annually was invested in the bank’s FirstChoice employer super platform which currently has $50 billion in funds under management. The bank had also invested $100 million annually in online payments capabilities during the last five years to support three billion transactions annually representing a value of $32 trillion annually.
Also speaking at the event, chief marketing manager, Andy Lark, said the IT investment had allowed the company to improve its digital merchandising through dynamic pricing, dynamic offers and signage based on the type of customer using its online portals.
“Next-generation analytics and business intelligence is also allowing us to capture this enormous data set we have and really build tailored and precision-guided offers for customers,” he said. “This isn’t just about us delivering better products but better marketing, and being far more relevant and contextual in addressing our customer’s needs.”
IT investments were also allowing the bank to become increasingly “social”, Lark said.
“We are expanding our footprint with salesforce.com, we are deploying Chatter internally and externally and we have signed a major agreement with Adobe to rebuild our online platform,” he said.
Commenting on the bank’s mobile payments application, Kaching, Lark said the bank was just at the “earliest days of peer-to-peer payments from the mobile platform” and that customers could expect new features and updates almost on a monthly basis.
“What core has given us is the ability to move with a new kind of agility and speed,” he said. “We are no longer delivering updates to, say Kaching, on the usual banking calendar of once or twice a year. We are doing it every month or so.”
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