NAB's IT transformation steaming ahead, says its driver
Adam Bennett, the man in charge of National Australia Bank's 10-year IT transformation, has reiterated claims the project is on track, despite the lack of an estimated finish date for the core banking system replacement.
His comments come just days ahead of an expected major strategy announcement around the bank's IT transformation on March 13. It will mark the culmination of a wide-ranging high-level review initiated late last year after criticism of the bank by shareholders.
The bank has said little about the content of the announcement, beyond telling the ASX the transformation project continued "to make good progress".
Mr Bennett, the bank's executive general manager of IT transformation, told a meeting organised by the Committee for the Economic Development of Australia (CEDA) in Sydney last week, it was too early to declare a winner in the so-called banking tech wars.
He claimed NextGen, a five-year project to install a new core banking system, would be "the differentiator that will give NAB the competitive edge". It began in 2008 and would be due for completion this year, but the bank has avoided questions on when it will be fully implemented.
Mr Bennett said it was "the most complex task the bank's ever undertaken" and would retire 100 legacy applications, making the bank more responsive to changes in the marketplace.
"NextGen is already in our environment and operating well," Mr Bennett said, referring to NAB's subsidiary UBank, which moved 300,000 customers to the platform in August. "To use a simple analogy, the rail tracks are laid, the engine in on the rails, and we are adding more carriages."
At the core of NextGen is banking software from Indian company i-flex, majority owned by Oracle. At the time, India's Economic Times put the value of the contract for i-flex at $US90 million.
Mr Bennett said the bank was "a third of the way through a 10-year journey to fundamentally transform our whole operating environment".
A spokesman for Mr Bennett later said a timeframe was no longer being placed on NextGen but on the entire transformation project.
"Big projects like this have revisions and their milestones change. We talk now about our total environment transformation. It gives a bigger and more correct picture of the work being undertaken," the spokesman said.
Denise Montgomery, financial services research director with Ovum, questioned the bank's ability to extend i-flex to the rest of its operations. She described i-flex as "a product designed for second-tier Indian banks, not large sophisticated multi-finance Australian banks", although it had been totally re-engineered by Oracle to meet the needs of NAB.
"It is all very well to have UBank on it but UBank is a very simple banking model. What is NAB's strategy when it comes to running the rest of the bank on it?"
Ms Montgomery said that, of Australia's big four banks, only Commonwealth Bank and NAB had attempted a full transformation of their core banking systems, and only CBA had so far achieved success.
"CBA is the only one that has a solid industrial-strength base. NAB are having a go at it but because of the way they bought it, they have still only got it operating in that traditional retail deposit vertical. It will be a long and painful journey for them to having an industrial-strength, agile base."