The Commonwealth Bank (ASX:CBA) has flagged a “revised scope and costing” of its multi-year core banking modernisation program, tipping the scales at $1.1 billion.
The increase, up from $1.029 billion as of August last year, has been attributed to revised scope resulting in additional functionality and complexity of the program.
Despite the cost increase, the bank claims no change to the business case supporting the IT modernisation initiative, stating the multi-million dollar increase for the half year to 31 December 2010 will be offset by an “enhanced benefits profile".
These benefits include a move to real-time banking, the ability to ‘instantly’ open new accounts and switch products, standardised processing and greater reliability of underlying technology platforms.
According to the bank, some 10 million retail deposit and transaction accounts had been migrated successfully to the core banking platform, and new retail deposit and transaction accounts were now being opened on the new platform.
Business deposits and transaction accounts are scheduled to be running on the new platform this year, while its lending business is due to be on the system next year. The Bank’s ASB and Bankwest business are expected to be on the platform by 2013.
Breaking down its $521 million IT spending for the half year to 31 December 2010, Commonwealth Bank said it spent $110 million on application maintenance and development, down from $134 million in the previous half year.
Data processing costs for the half totalled $129 million, down from $123 the previous half, while desktop spend was $65 million, down from $73 million.
Communications tipped $97 million, down from $103 million the previous half; amortisation of software was $81 million, up from 74 million; and IT equipment depreciation was $39 million, up from $37 million.
In line with the mass adoption of smartphones and mobile broadband, the bank also noted that some 14 per cent of all logons to its NetBank online portal were now made from mobile devices.
As reported by Computerworld Australia last month, Commonwealth Bank pushed out a two-factor authentication NetCode SMS service to all of its personal banking customers as a means of improving security in January.
In December 2010, the bank was caught out by a computer glitch with its NetBank site resulting in the online banking portal being inaccessible to some users.
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