Changing of the guard: Westpac

Summary:Get an insider's look at the recent history and potential imminent future of the technology operation of Westpac Banking Corporation and its subsidiary St George in the last of our Changing of the guards series examining generational change in the nation's big four banks.

Westpac's mouth is so full of St George that it couldn't fit in a core banking rip and replace right now if it wanted to. Instead, it's carefully shoving the best bits of its acquisition down its gullet and hoping it will reap the benefits of the integration so it can later spend its way to upgraded core systems.

Sarv Girn (Credit: Westpac)

The month the bank nominated last year to start its integration — September — has now closed. Westpac's chief technology officer Sarv Girn tells ZDNet.com.au that the bank has started to execute the IT strategy which the new Westpac/St George team has developed. He adds, however, that the strategy is still a work in process, the results of which will be announced when "analysis and commercial negotiations are complete".

It seems a long time since Westpac first said it would buy St George, and some might wonder why the technology integration is only just getting underway. The time has not been spent idly, though, with the bank's technology leadership dealing not only with strategy, but also the structure of the IT team.

Shortly after the merger, the banks announced a major management revamp, bringing in former Commonwealth Bank IT executives Bob McKinnon and Sarv Girn as group executive technology and CTO. Brad Cooper, taken from his position as chief executive of Westpac's New Zealand outfit, was named as chief transformation officer. The old guard was hosed out — the last bastion being Westpac CTO David Backley — and the IT organisation reorganised.

"We now have a core IT group focused on design, build and run elements and business unit CIO roles (including at St George) who report into both Bob and the respective group executive in their business based on clear, delineated accountabilities," Girn says. Governance has also been tightened at the board, executive and technology management level.

With McKinnon sitting at the centre of the new web, it's meant a more central focus, enabling the bank to look to shared services. A source working with the bank said that the reorganisation, which forced the CIOs from the different business groups to work together, made much more sense than how the bank had previously functioned: "It started ringing instead of clunking," they said.

McKinnon can be chummy with the board — he spent time being the joint managing director of building giant Multiplex — or he can roll up his sleeves and dig in, according to a source. Yet his real, self-professed passion is team building. He likes to surround himself with talented underlings, such as Girn, who has been described as his "general".

Accordingly, the new team was a "tight ship", a source said, with simplification and transformation on everyone's lips as they follow Westpac CEO Gail Kelly's mandate to be focused on the customer. This mandate goes head to head with Commonwealth Bank's desire to "delight" its own users. In fact, Girn himself has also used the words "delighting customers".

He will need to. Westpac has to show St George customers they haven't been bought by the evil empire — if they're not at least grudgingly accepting, they'll take their business elsewhere.

That's why the IT strategy is starting at the user end, putting aside core banking considerations until front-line systems can be revamped and integrated. "Success here will enable Westpac to offer more innovation to its customers in self-service channels (for example, internet [banking] where our business needs will be met through innovative functionality in modern, best of breed internet packages) and will simplify assisted service points (eg, branches and call centres)," Girn says.

Some work certainly seems necessary. Kelly last year called technology a "low light" for the group. One analyst fingered the bank's teller system as something requiring special attention. "Westpac's existing client facing teller system is cumbersome, and slow. The long queues in some offices today are not a good advertisement," Intelligent Business Research Services advisor Alan Hansell says.

Westpac has flagged that it will likely go for the cheap option and use the teller platform St George already has, called "Spider", saying that if it didn't it would have to buy a new one. It also wants to move to St George's HR and CRM systems, HR express and Firefly. Meanwhile, St George will be moved to Westpac's finance and treasury systems. Along with these changes, the bank will also be investing in an upgraded online banking platform and looking to upgrade Westpac's ledger platform and systems for transactions and deposit products. The latter upgrades will be important for real-time transactions for time-sensitive products such as debit.

"A wise move, as this creates stakeholder perception of the merger being a success. It means management can tackle dysfunction in the less visible core banking systems area at a later date," Hansell says. "I suspect Westpac's management is 'gun shy'. Its initiative aimed at redesigning its core banking systems through CS90 (Core Systems 90) failed in some areas but succeeded in others. Unfortunately, it is the failures — not the successes — people remember."

However, whatever the bank's reason has been for transforming the customer-based systems first, using existing systems might not achieve the best result possible, according to Cyrus Daruwala, Asia-Pacific managing director for IDC subsidiary Financial Insights.

"It may be a short-term fix, it's not a long-term strategy," he says, adding that he thought it wasn't likely the teller system could scale easily to the millions of customers that St George and Westpac have together. He also doesn't think much of Firefly. Despite this, using a system the banks already own makes sense in a monetary sense, according to Daruwala, which in tough economic times is paramount.

"You have a depreciated asset, for example, a teller system or a core or a hardware or a box or a server or an app, something fully paid for and you've fully benefited from a depreciation model," he says. The alternative — something new — will spike costs in times where growth is uncertain. "Do you seriously think the board would sit and have a chat and say what's the best? No they don't," he says.

Topics: Banking

About

Suzanne Tindal cut her teeth at ZDNet.com.au as the site's telecommunications reporter, a role that saw her break some of the biggest stories associated with the National Broadband Network process. She then turned her attention to all matters in government and corporate ICT circles. Now she's taking on the whole gamut as news editor for t... Full Bio

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