​Reserve Bank to lay off staff once IT projects wind up

Reserve Bank Governor Philip Lowe has told an economics committee that as some of its IT projects wind up later this year, the RBA's overall staff numbers will decline.

With the new payments platform (NPP) slated for rollout later this year, the Reserve Bank of Australia (RBA) has told a House of Representatives Standing Committee it is expecting to reduce its staffing numbers.

Addressing the Standing Committee on Economics on Friday, RBA Governor Philip Lowe discussed the findings of an independent review he commissioned back in February, which suggested some areas for the bank to focus on was the development of a shared, internal services centre to drive continuous improvement within the bank, and the further evolution of its approach to IT as some of the RBA's major IT-related projects come to an end.

"As these projects wind down, we're looking to make sure that the size and structure of our IT function remains appropriate, and more broadly as some of these projects finish later this year, the bank's overall staff numbers will decline," Lowe revealed.

"These projects are in the banking and payments areas and they've been undertaken in a national interest."

According to Lowe, the banking industry is in the final stretch of developing the NPP, which will allow for near real-time funds transfer between bank accounts, regardless of who people bank with.

"This new payments infrastructure will provide Australians with the ability to make real-time, information-rich payments on a 24/7 basis," Lowe explained on Friday, noting all a user will require to perform an "instantaneous payment" with the forthcoming system will be the recipient's email address or mobile phone number, rather than the BSB and account numbers currently used.

The governor said the new system is expected to commence processing payments later this year, something he told the committee when probed back in February.

He said the rollout, however, is likely to start off small, and then gradually "ramp up" next year as financial institutions gain experience with the new way of operating 24/7.

"It's been a complex project, and the Reserve Bank has played an important role, both in policy terms and as the provider of a key part of the infrastructure," he added. "As the government's bank, the Reserve Bank will also make the new payments capabilities available to its government banking customers."

The payments project is a cooperative effort between the bank and the payments industry to modernise key parts of our electronic payments system, which has been actioned under the guidance of the RBA's Payments System Board.

The RBA kicked off the project in 2012 when a review of its internal innovation capabilities laid out "strategic objectives" for the Australian payments system.

Hesitant to comment on the civil penalty proceedings initiated by the Australian Transaction Reports and Analysis Centre (Austrac) against the Commonwealth Bank of Australia (CBA), Lowe did say the matter is "very serious".

"We have these laws and rules for reasons. Banks should not be doing money laundering and they should know who is operating the accounts that they open," Lowe said.

"They're very important laws and they need to be respected. If shortcomings are identified, then there needs to be accountability, and that accountability needs to go both through the courts and internally within the organisation."

Austrac alleged that CBA has been involved in "serious and systemic non-compliance" with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, and detailed 53,700 breaches of the Act, which included failing to hand 53,506 threshold transaction reports (TTRs) for cash transactions over AU$10,000 to Austrac through intelligent deposit machines (IDMs) for almost three years between November 2012 and September 2015.

In a response issued on Monday morning, CBA claimed that much of the blame for the lack of filing was due to a "coding error".

"By and large, Australia had been well-served by its banking industry, but we do need to focus on the cultural elements of trust and risk management -- and the current proceedings will reinforce that, I'm sure," Lowe added on Friday.

Lowe also confirmed Australia's new AU$10 bank note will be released on September 20, 2017, with printing already complete.

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