Ten years after what was then Australia's third largest bank secured control of the fifth largest, Westpac may at last be on a mission to wrestle value from its takeover of St George Bank.
In an interview with his employee at the Westpac Wire portal yesterday, CEO Brian Hartzer outlined a fresh program of work to complete a task budgeted and abandoned in the past.
Hartzer said that, as they "collapse the old St George systems and the Westpac systems into one - which will happen progressively over the next few years", that would lower the cost of running the group's banking platforms. He left aside exactly how many more years it might take to get on top of the St George IT legacy.
"[But], very importantly though, it's going to lower the cost to make changes,"
he said.
Hartzer framed much of his presentation around Westpac's 2018 full year profit over the year to September 2018 around the bank's ambitious and mostly effective spending spree on various pillars of its technology vision, heralding the utility of its newish Customer Service Hub above all.
"Out of a total investment spend of $1.4 billion, we invested more than $800 million in system upgrades, digital transformation, and innovation," Hartzer chirped in the opening to his commentary in the results pack on tech themes.
The bank said it had "already migrated 100 applications onto our cloud infrastructure platforms, which are now largely complete."
Citing fashionable tech priorities, the bank said it had more than 120 APIs in production and another 180 in development.
While these capabilities support its Customer Service Hub, "which is progressing to schedule" that data will also animate the fintechs and neobanks relying on the open data standards (that apply from mid 2019) to spark their own tech success stories, at Westpac's expense.
The hub itself will take until 2021 to be fully functional.
"I think given we're already quite efficient, the benefit of getting those systems modernised is going to give us a huge advantage on cost over the medium term," Hartzer argued yesterday, wrapping up a bank reporting season in which the average cost to income ratio climbed by 356 basis points to 46.6 per cent (on KPMG's analysis).
In this regard, Westpac was an outlier, its CTI ratio rising by 143 basis points over the year, to 43.7 per cent.
It's nice to be the low cost bank for now, but Hartzer may recall that his predecessor, Gail Kelly, laid down an ambition to get this ratio to 40 per cent and world best practice is an even lower ratio.
The Kelly legacy and - looking back - the questionable merit in the St George merger, still bedevil Westpac all these years later.
Data from Roy Morgan Research provided to Banking Day shows a steady decline in group market share in consumer finance products for Westpac over the four years to September 2018.
Overall this was 27.1 per cent in September 2014. Now it is 25.7 per cent.
Almost half this loss in market share can be placed squarely on the shoulders of the Westpac main brand, estimated at 17.0 per cent recently, down from 17.9 per cent four years ago.
BankSA's share is holding steady around 1.5 per cent and, after a slower than slow ramp up, the Bank of Melbourne share has crept to 1.3 per cent.
The rest of this decline is centred on the NSW-centric St George brand, down to 6.9 per cent from 7.6 per cent over this period.
Questions over the progress (if any) from the amalgamation of the Westpac and St George banking platforms over the years have not always been well received by the bank.
Wasted investment in the hundreds of millions almost led to the firing of Gail Kelly as CEO of Westpac in early 2011, only two years after she crossed over from a stint as St George, going on to convince her new employer to hurry up and takeover her old bank.
Hartzer, in a recent burst of candour, has owned up to a little-discussed understanding that St George in 2008, before it folded into Westpac, was another bank facing ignominy equal to the threatened failures of Bankwest and Suncorp.
Do you think, on reflection, it was a good idea for the government to allow you to take over St George?, a brave government MP asked the Westpac CEO at a hearing three weeks ago of the House of Representatives Standing Committee on Economics.
"The alternative was that St George would have failed," Hartzer surprised with a declaration that invited no more debate.
For his next act, Hartzer may care to dig out the Grant Samuel appraisal of the Westpac offer for St George back in September 2008.
Bank takeovers don't always generate value for the buyer, Grant Samuel cautioned shareholders of both banks in the firm's analysis of the proposed merger.
The extent of synergies in finance sector combines was, historically "not unambiguous".
And in the present case, the utility of the Westpac multi-brand strategy is more illusion than an investment case.