CBA reviews Bankwest IT contracts

CBA reviews Bankwest IT contracts

Summary: The Commonwealth Bank of Australia has initiated a review of major IT licensing contracts held by Bankwest as it takes the first steps into integrating the technology systems of its new subsidiaries Bankwest and St Andrew's.

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The Commonwealth Bank of Australia has initiated a review of major IT licensing contracts held by Bankwest as it takes the first steps into integrating the technology systems of its new subsidiary.

Michael Harte
(Credit: ZDNet.com.au)

In annual results briefing documents this morning, the bank said it had "initiated a review of major contracts and licences to identify savings through additional buying power, notably for large IT licensing arrangements".

In general, CommBank is taking it slowly when it comes to integrating Bankwest's technology systems into its own, confirming again today that it would not start moving Bankwest onto the CBA core banking platform until 2012.

However, some initial steps have been taken, with CBA noting today that it has established "initial technology links" between the pair as well as reciprocal ATM access. For the year ended 30 June, $60 million was spent on integration of the pair's IT platforms (more than half of the total integration costs of $112 million).

Another slide appeared to show that total IT integration costs were expected to be $103 million over time, with $28 million in annual expense synergies to be reaped from the IT integration by 2012.

In general, the Commonwealth Bank's overall IT expenses excluding Bankwest costs for the year to 30 June actually shrank slightly (down $3 million to $823 million, compared with the previous year), despite the ongoing replacement of its core banking platform the bank is conducting with SAP and Accenture.

The bank said today that the first three products had been launched on the platform, appearing to reiterate comments by SAP's local chief Tim Ebbeck last week that the project was on track.

Significantly, the bank cut its application and maintenance costs by 32 per cent in the period to $152 million. That amount was offset mainly by increasing depreciation and amortisation costs. Bankwest added $50 million in IT expenses to the bank's costs to make a total of $873 million.

CommBank chief information officer Michael Harte was not available to comment on the results.

Topics: SAP, Banking, Legal, Outsourcing

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