Almost every day new analysis emerges arguing the shares of Australia’s banks are overpriced. The big banks have certainly been on a tear, despite the fact the outlook for the economy is flat at best and even as bad debts are inching up and cost inflation hasn’t dissipated.
Revenue is hard to come by, and that means performance is going to hinge on cost management. For that, the big differentiator is going to be technology. Westpac today unveiled its plans for a Great Leap Forward to improve a technology setup it argues is not out of date but just too complex, with too many systems.
That costs time, customer satisfaction and shareholder returns. As CEO Peter King said today, preparing Westpac for the open banking regime cost 30% more than it should have because of the number of systems involved.
Westpac’s project is called Unite, referring to the underlying aim to reduce systems by two-thirds, shift to fourth generation platforms and build on work already undertaken to improve the foundations — although not replace core systems, which chief information officer Scott Collary said were still fit for purpose and robust.
