Westpac continues technology investment drive

Westpac Group's digital transformation continued to make up a sizeable amount of the company's overall investment spend during the first half of the 2015 financial year.

During the first half, total investment spend was AU$458 million, with technology programs accounting for 25 percent and growth and productivity programs making up 51 percent. According to the company, investments in business initiatives, such as its digital transformation project, would help drive growth and enhance the customer experience.

Some of the more specific digital investments included the continued migration of server infrastructure in Westpac's new datacentre, as well as the rollout of its online mobile platform Westpac Live to 3.1 million Westpac customers. According to the bank, the migration of Westpac business customers onto Westpac Live is currently under way, with 300,000 business customers already on the platform.

During the six-month period, the company achieved a statutory net profit of AU$3,609 million, a decrease of AU$13 million compared to the first half of the 2014 financial year.

AU$113 million was invested into building on Westpac's productivity and simplification program of increasing self-service options for customers, and branch simplification. Westpac also announced that its customers are now able to access correspondence from the bank, including statements, through Australia Post's MyPost Digital Mailbox.

The company said progress was also made to Westpac's Asian strategy, where its global trade platform and core banking systems in Singapore, Hong Kong, and India were completed.

In comparison to the second half of 2014, the total investment during this first half was 15 percent lower. Westpac said that it was primarily due to the timing of expenditure, with major regulatory change programs.

Westpac CEO Brian Hartzer said the goal for the bank is to build the value of its franchise.

"We have grown our customer base and continued to improve customer service, while maintaining our disciplined approach to growth and margin management," he said.

"We are seeing the result of our service revolution program, with Westpac retail and business banking delivering record customer growth and improved customer satisfaction. Our St George Group brands also contributed positively, with Bank of Melbourne continuing to grow market share.

"We achieved good growth in New Zealand, supported by changes to our distribution networking and the increased use of digital channels."

Westpac's total operating expenses during the first half of 2015 increased AU$189 million, or 5 percent, compared to the first half of 2014. It said this was partially driven by higher "other expenses", which increased AU$67 million compared to the first half of 2014 from advertising and outsourced technology costs.

Westpac New Zealand reported that it made similar technology investments during the period, which contributed to its solid net income result. The New Zealand division reported net income of NZ$832 million, up from NZ$809 million reported during the first half of 2014.

During the half year, it launched Westpac One, a new internet and mobile banking platform, resulting in an average 52 percent rise in online applications across cards, personal loans, and home lending.

Its fleet of "smart" ATMs was also expanded, increasing numbers of 8 percent to 143. Westpac said the increase in convenience for customers was reflected in the 33 percent of all deposits processed via the channel, of which more than one third were conducted outside normal business hours.

With half a year remaining, Hartzer said the outlook is positive, but competition in banking will remain intense, especially with new entrants.

"In this environment, and with considerable regulatory uncertainty, we will continue to run our businesses in a way that provides the headroom to manage volatility, while investing in our people and technology to build the value of the company," he said.

He also highlighted that a focus area will be investing in additional resources to strengthen its security systems to counter "new and emerging threats". Earlier this year, Westpac launched Touch ID to allow customers to use their fingerprint to securely sign into Westpac Live on their smartphones.