AMP bins core platform overhaul

George Lekakis Authorised deposit-taking institutions
Francesco De Ferrari, AMP’s CEO and bank critic
Francesco De Ferrari, AMP’s CEO and bank critic

AMP Bank has abandoned plans to replace its core banking system after terminating its relationship with digital platform provider, Temenos.

In a statement emailed to Banking Day last night, the bank confirmed that it had ditched its preferred partner arrangement with the Swiss-based banking technology company.

Instead, the challenger bank has elected to upgrade its existing NTBS platform to deepen its digital capability.

“The bank explored a number of options and the best way forward is to enhance and modernise the existing core banking system,” AMP said in the statement.

“Renovating the current system will allow the bank to accelerate delivery of digital capability, whilst we enhance our customer experience and position the bank to scale.

“This aligns with our strategic intent to grow the bank.”

The decision to abandon the option of transforming the core banking system represents a shift in the thinking of the bank’s senior management since the middle of last year.

While a move to a new platform was never set in stone, chief executive Sally Bruce told Banking Day last July that replacing the NTBS system was “doable”.

“We’ve got some work to do to step away from legacy platform,” said Bruce at the time.
“But I feel very comfortable that we have a task that’s very doable as a bank that’s still quite small and that has never acquired or tried to integrate another platform.”

The bank appears to have gone cold on the prospect of migrating to a new core system since Francesco De Ferrari arrived in Sydney last December to take over the reins of the embattled AMP group.

AMP Bank has been reviewing its banking technology over the last two years with a view to modernising the bank for scale growth in the future.

The long-running review examined technical options for acquiring new functionality in terms of automation, chat bots and product ledger.

Large and small Australian banks are under pressure from digital startups and the prudential regulator to replace ageing core banking systems that are struggling to respond to the strategic challenges of the digital revolution.

Banks with mature platforms are mostly taking longer to bring digital products and services to market such as NPP-enabled real time payments.

AMP Bank is one of the established ADIs that does not yet offer the NPP-enabled Osko
service to its customers.

While the company’s decision to discard the core platform replacement might surprise some technology specialists, one of Australia’s leading operational risk experts Patrick McConnell said technology transformations were always fraught with peril.

“Core system replacements are very risky undertakings,” he said.

“While they are unbelievably risky, banks eventually have to do them.

“Most boards run away from having to do them but that just pushes the problem down the road.”

McConnell said operational breakdowns associated with recent platform replacements at TSB Bank and Cooperative Bank in the UK had tempered the aspirations of most Australian bank boards for technology renewal.

TSB’s technology overhaul in April 2018 resulted in more than 1 million customers being denied access to electronic banking services for several weeks.

Some customers also reported details of other customers’ accounts appearing on their personal computer screens when they tried to log into TSB’s internet banking service.

Customers continued to report problems using the bank’s volatile mobile and internet services for the next five months.

The fiasco forced TSB chief executive Paul Pester to resign last September.

Critics of AMP Bank’s decision might point to the success of ME Bank’s core system replacement early last year.

ME previously operated on the same NTBS platform as AMP, but switched to a Temenos T24 system that delivers straight-through processing across most of the bank.

ME chief executive Jamie McPhee partly attributes recent improvements in his bank’s cost performance to the platform overhaul.