Technology reinvents the customer experience at Westpac

Westpac chief executive Gail Kelly has justified the bank's continued investment in technology and new digital platforms, saying that 10.5 per cent of the bank's sales are now performed via digital channels and around 50 per cent of all credit card sales are done digitally.

The bank boasts four million active digital users, and 2.4 million active mobile users. Its continued investment in technology means that this year it reported a capitalised software balance of A$2.1 billion - equal second among the Big Four.

Kelly said technology was "reinventing the customer experience" and allowing Westpac to achieve "the dream" of marketing to a segment of one, which she said was possible because of technologies such as cloud computing and big data.

Westpac, she said, had made great strides in this area, having sent out 67 million proactive messages to customers based on a finer grained understanding of their habits and needs.

Being able to better target customers and cross-sell products has helped the bank again lift its revenue per employee numbers. These have been on an upward trajectory over the last three years, from $495,000 per full time employee in 2012 to $525,000 in 2013, and $547,000 in 2014.

Technology is also enhancing Westpac's efficiency. "We remain the most efficient bank in Australia and one of the most efficient banks in the world. We have seen a 41 per cent to 42 per cent expense to income ratio for the last four to five years and through the service revolution I want and expect to see that to come down further," Kelly said.

Westpac technology is led by chief information officer Dave Curran, who previously led Commonwealth Bank's core system modernisation program. Curran is now spearheading the second phase of Westpac's modernisation journey, which began this year.
 
During the first phase of the modernisation program the bank undertook its billion dollar Strategic Investment Priorities initiative, most of which has been completed, with some remaining elements rolled into other projects.

That first phase delivered progress in terms of modernising customer channels and infrastructure - to the extent that the bank has again managed to cut the number of Severity One computer failures, down from 44 in 2013, to just 26 in 2014.

It is also two-thirds of the way through a consolidation of its email platforms from three to just one, and has a number of consolidation projects underway in other areas of the business including BT.

Where Westpac's technology report card is still lagging is in the area of core processing. The bank has yet to complete a core systems revamp, although it has begun the consolidation of its Hogan platforms onto the latest CSC Celeriti system.

When complete, that platform will be part of a network of systems which together will form the technology fabric of the bank - with cloud computing playing a growing role.

 Westpac's annual results presentation noted that the bank was on a journey to leverage cloud and that there was a "foundational infrastructure build underway to allow for broad enterprise consumption of public cloud services."

Cloud computing, which delivers greater agility and the opportunity to offload technology spending to the opex rather than capex budget, is of great interest to all the big banks.

Speaking last week at the launch of the Australian version of Microsoft's Azure cloud, Commonwealth Bank chief information officer David Whiteing said CBA wanted to develop a "light, less complicated infrastructure" with cloud being integral to that.

"We want as much as possible for infrastructure and services to be 'on demand'. We want a much more pay as you go model than we have had traditionally," Whiteing said, noting that the option of more locally domiciled clouds was helping to lower the regulatory barriers for banks.