Tech investment helps drive up Westpac costs

Customer Service Hub plan has “moved from concept to development,” CEO says; upgrade of St George core banking system completed

Westpac registered a 3 per cent increase in costs for FY16 in line with the group’s revenue growth, with its CEO, Brian Hartzer, telling a full year results briefing that the bank’s investment spend would help put it in good stead for future returns.

The bank reported an expense to income ratio of 42 per cent, down 7 basis points. Technology expenses grew by 10 per cent ($171 million) to $1.92 billion.

“While we could have cut investment spending this year and reported lower cost growth, we think the right thing for shareholders in the long run was to maintain it,” Hartzer said.

“The new platforms we are building will deliver world-class service for our customers; they’ll make our bankers more productive; they’ll reduce our risks and they’ll lower our costs — and that will help sustain returns over time.”

The CEO said that from the point of view of boosting productivity, key next steps for the bank will include helping shift customers to digital channels, automating and streamlining processes and reducing manual handling as well as simplifying its product offerings.

“To give you a sense of the progress here, we’ve now passed 1 billion logins on our digital channels. and in the second half 22 per cent of our sales were done online,” Hartzer said.

“Over the last 12 months we’ve digitised seven out of the top 10 manual activities in our branches and [in our call centres]. This includes things like activating a new credit card online, blocking and unblocking a card, or disputing a transaction.

“For our business bankers we rolled out a new system that allows them to complete annual reviews in minutes rather than what used to take days.”

Investing in the bank’s technology platform has been a “big driver” of cost, he said, with some important milestones achieved this year.

They include rolling out a new online banking platform for business at St George, Bank SA and Bank of Melbourne. This has delivered a significant lift in digital usage and an increase in the bank’s net promotor score, the CEO said.

In August, St George completed the migration from the CSC Hogan core banking platform to the newer Celeriti system. “This will ultimately be the single transaction and deposit backend system for our retail bank so this is a big milestone,” Hartzer said.

In addition, the bank’s Customer Service Hub “moved from concept to development this year.”

The hub will leverage cloud infrastructure to deliver a single view of the customer across the group's brands. The bank has previously said that it will boost opportunities for omnichannel sales by enabling cross-channel conversations with customers as well as let it rationalise numerous applications and systems.

“We’ve now proven that the system works and will deliver the functionality that we require,” Hartzersaid.

In addition, the Panorama wealth-management platform is now live “with funds on the platform growing strongly.”

Westpac announced cast earnings of $7.82 billion for the full year.

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