Westpac’s $100 million investment in the Reinventure venture capital fund is paying off for the bank, according to group CEO Brian Hartzer.
Reinventure has made 20 investments in areas including distributed ledger technology, payments, data analytics, digital currencies, social networking and P2P lending.
Those investments are increasingly a strategic asset for Westpac, Hartzer told a briefing on the bank’s first half results.
“These investments have helped build Westpac’s reputation as a good partner for fintech companies and this is now paying off in our core business,” the CEO said.
He cited as an example the launch in April of Presto Smart, which integrates point-of-sale systems with merchant payment terminals.
“Presto was built in partnership with Assembly Payments, which was one of our first Reinventure investments,” Hartzer said.
“While it’s early days, the market response has been good and given many of the POS systems are international, we see some genuine global opportunities for Assembly Payments off the back of these.”
Hartzer told the briefing on Westpac’s results for the six months ended 31 March that the bank managed to save $32 million in the first half through better management of its technology contracts as part of its efficiency drive.
All up, Westpac cut expenses by $131 million in the half, bringing the total to almost $900 million over the least three-and-a-half years, the bank’s CEO said. The bank has continued to migrate customers to digital channels, reduce over-the counter transactions and consolidate branches, he said.
Westpac is on track to this year save another 232 tonnes of paper through increased adoption of eStatements and expanded the use of eDocuments and its LOLA small business platform, he added.
Hartzer said he expects the bank to find more efficiencies as it retires old platforms and implements its Customer Service Hub. The hub is a large-scale transformation program based on the vision of One Bank Platform across the group.
Westpac mortgages are expected to go live on the hub by the end of the year. (The bank last year pushed a small number of employee home loans through the hub.)
Shifting home loans to the Customer Service Hub is expected to deliver a 1.7x to 1.2x reduction in costs, cut time spent processing by 25 per cent, and reduce customer documents by 50 per cent. The bank expects a 25 per cent reduction in the cost of mortgage origination from the Customer Service Hub.
“The customer service hub is progressing well and is central to renewing our technology infrastructure,” Hartzer said. “It gives us the tools to materially improve the way we interact with customers across channels, products and businesses and the first wave will be live for Westpac mortgages by the end of the year.”
The bank said technology expenses increased by $23 million (2 per cent) compared to the second half of 2017, which it said was largely from the impact of its investment programs.
Technology services costs grew by $42 million and software maintenance and licensing costs by $17 million. Westpac said that the growth was driven by programs including the Customer Service Hub, the BT Panorama wealth management platform, and “enhancements to the Group’s technology infrastructure”.
Westpac announced a statutory net profit of $4198 million for the half, up 7 per cent.