IT staff working at the Commonwealth Bank won't see their jobs sent offshore in the near future, according to CEO Ian Narev, who today told analysts at a strategy review that the bank's investment in technology ensures that jobs stay in Australia.
Narev said at the Sydney-based briefing that he doesn't believe in aggressive offshoring to relieve cost pressures on the bank's bottom line.
"I don't think the right thing for long-term value is to set targets and aggressively rid ourselves of people in order to achieve those short-term targets," he said, adding that the bank's technology investment helps ensure that jobs stay onshore.
"We have the confidence based on our technology investment and on our approach to productivity to see our value in our core enterprise without the need to send Australian jobs offshore," Narev said.
This wasn't to say, Narev added, that jobs are 100 per cent safe all of the time at the Commonwealth Bank.
"As we go process by process through the bank, we do find that there are some roles that don't need to be done anymore — that happens for any organisation in good times or in bad — but it doesn't mean we're setting aggressive redundancy targets," the executive said.
IT staff have been at the mercy of financial industry job cuts and offshoring moves in the last 12 months, especially at Westpac, where several rounds of job cuts stemming from a business review saw staff culled over a period of months. NAB and ANZ have also cut jobs in the last 12 months in a bid to stay profitable.
Narev said he wouldn't pass judgment on job decisions made by other banks, but that he certainly wouldn't implement that strategy within the Commonwealth Bank. He said that offshoring is never as efficient as it appears at the outset.
"I can see arguments as to why people would [offshore]. I'm certainly not going to sit here and say that the decisions our competitors made are stupid, given they're very good institutions and they would have thought through it carefully.
"In my experience, over 10 years looking into offshoring and labour-cost arbitration, the number of disappointments you get at service levels and operational risk on the people actually doing this for you overseas, never gets factored well enough into business cases. Actually, we believe that the benefits of offshoring need to be significantly discounted to match with realities," Narev said.
Narev used the rest of the briefing to discuss the bank's three-tiered strategy moving forward, of which technology is a key tranche.
Narev told analysts that technology is continually changing the tastes of customers and the way in which customers choose to interact with the bank. As a result, the executive says he wants to create a world-leading bank in terms of technology innovation, leveraging off its existing opportunities created by its $1.1 billion core-modernisation project.
The executive added that the Commonwealth Bank will maintain its competitive advantage over local competitors due to its decision to modernise the core of its business, rather than modernising various customer touch points, like Westpac with its Strategic Investment Portfolios. By doing so, Narev added, the Commonwealth Bank is able to easily move funds around between its customers in an environment where physical money will play a shrinking role.