Westpac experienced zero Severity 1 IT incidents in the second half of FY18 and the first half of FY19, which group CEO Brian Hartzer says reflects the bank’s technology investment program.
During the last financial year Westpac reported two Severity 1 incidents, down from five in FY17 and 19 in FY16.
“We are now seeing the benefits of the investment program we started five years ago to simplify and modernise our technology platforms,” Hartzer told a briefing on the bank’s results for the six months ended 31 March.
“System stability is a great example,” the CEO said. “In previous years we were responding to around 16 Severity 1 incidents each half — these were system outages with significant customer impact. Thanks to the investment we’ve made we have now gone over 12 months without a single Severity 1 outage.”
The CEO said that the bank’s launch during the half of its Customer Service Hub is a “major milestone” for the group.
“In addition to transforming the mortgage origination process, the system is a critical backbone that helps us modernise and replace out core systems over the next few years,” he said.
The hub is part of a program to standardise and streamline backend systems across the group’s brands.
Earlier this year, group chief information officer, Dave Curran, departed Westpac. Curran played a key role in steering the development of the CSH. (He has been replaced by Citi’s former Global Consumer Bank chief technology officer, Craig Bright.)
So far hub has been used for Westpac mortgages, with the bank expecting its remaining retail and regional brands to launch on the platform late this year, with broker applications commencing in 2020.
Other major technology milestones during the half included the launch of a cloud-based HR management system that the CEO said would offer “new tools” for managing productivity, a new risk analytics capability, which is built on Westpac’s big data platform, and upgrades to banker desktops that “significantly improve productivity and collaboration.”
“We expect bigger cost savings to drop progressively over the next few years as we complete the rollout of the Customer Service Hub, retire old platforms and deliver the benefits that come from product simplification and automation,” the CEO said.
Hartzer said that the bank had made “real progress” on both digital sales and service. A chatbot dubbed ‘Red’ based on IBM’s Watson platform will go live to Westpac’s entire customer base tonight, after a limited rollout late last year.
“To date it’s already responded to over 100,000 customer enquiries and as an AI platform that more that Red operates, the better it gets. This means quicker service for customers and fewer calls to our call centre,” Hartzer said.
Westpac has also rolled out new digital frontend systems for mortgages across its regional brands, a new digital signature process for mortgage documents, and expanded the use of e-conveyancing.
During the half technology expenses grew by $53 million to $1.14 billion, a 5 per cent increase on the second half of FY18. Westpac said that excluding notable items, technology expenses increased $33 million from higher technology services and software maintenance and licensing costs to support the bank’s technology infrastructure, cyber security and the Customer Service Hub.
Westpac said it had registered $23 million in savings from technology modernisation, including a 20 per cent rise in cloud storage volumes and the retirement of 13 applications.
The bank reported statutory net profit $3.17 billion for the half, down 24 per cent, and cast earnings of $3.3 billion, down 22 per cent.
“This is a disappointing result reflecting weaker business conditions and the bank dealing decisively with outstanding issues, including remediation and resetting our wealth strategy,” Hartzer said.
“The past six months has been a turning point for the bank. We are proactively addressing legacy issues while improving our products and services to ensure they deliver the right customer outcomes. We’re exiting personal financial advice to focus on the parts of our wealth business where we have a competitive advantage, and we are delivering significant cost savings by simplifying our business.”