Westpac embarks on huge tech project to rebuild spaghetti IT systems

afr.com:

Westpac will ramp up investment spending to $2 billion a year as it finally attempts to rebuild its spaghetti-like technology platforms, and make up for 15 years of underinvestment since buying St George in 2008.

The bank will reduce the technology systems it runs from 180 to 60, as it tries to cut recurring costs, reduce regulatory risk and approve loans faster, Westpac said on Monday.

After fixing various compliance problems and selling a dozen non-core assets over the past few years, it will spend at least four-years simplifying its processes and IT systems. Analysts say complexity has been a drag on Westpac’s market share and net promoter scores measuring customer satisfaction, and probed about the costs and execution risks of the new project.

Westpac CEO Peter King on Monday. “As the world gets more complex in terms of its requirements, we need to simplify,” he said. Edwina Pickles

“Our technology is not older or less capable than peers – we just have too much of it,” Westpac CEO Peter King told analysts on a conference call.

“This is a massive commitment for this organisation. There is a big goal here. But we have to do it.”

Since former CEO Gail Kelly acquired St George during the financial crisis, Westpac has run the two banks on different core banking systems. Westpac uses a core ledger built by CSC Hogan, while St George operates on Celeriti. The more than 100 disparate systems for managing operations like payments, customer identity and collections have sprouted up on top of these, and across its other brands Bank of Melbourne and BankSA.

Analysts asked about timelines and metrics for measuring success. Barrenjoey analyst Jon Mott called for a separate strategy briefing on the project – which Mr King committed