Tech not replacing branches yet: CBA CEO
New Commonwealth Bank chief executive officer, Ian Narev, has said that the bank's extensive investments in multibillion-dollar technology initiatives, including its core migration project and new Kaching payments platform, won't replace the bank's network of branches any time soon.
Brisbane flagship branch manager, Fleur Foster, shows off the technology on offer in the Commonwealth Bank's Brisbane-based service push.
(Credit: Luke Hopewell/ZDNet Australia)
Speaking at the bank's half-yearly results briefing, Narev told analysts that the bank has always had a commitment to its branch network and won't get into the business of replacing them with stand-alone, self-service technology in the immediate future.
"There was a lot of analysis in the mid-'90s that said that branch networks were dead, and everybody said 'let's haul back the investment on branch networks', and they did it. All of a sudden in about 2000 [and] 2001, everyone woke up and thought 'gosh, branches are still making money, let's invest more in branches'.
"Although we do talk a lot about technology, mobile and peer-to-peer payments ... and say that in the long term that they will be a critical source of differentiation, in the near to medium term at a minimum, the branch channel remains an absolutely critical part of our momentum and a big part of our strategic differentiation," Narev told analysts this morning.
The Commonwealth Bank recently released its first self-service, peer-to-peer payments app — Kaching — to the mass market. The app enables customers to pay each other phone-to-phone or even via social networks like Facebook. Kaching even pays people who aren't Commonwealth Bank customers. Narev said that Kaching had experienced success after its introduction, with over 100,000 downloads of the app so far.
Narev said that instead of eliminating bank branches in favour of app-like technology, the bank will retool many of its branches to serve customers differently.
"We're doing a lot of thought about what the future will look like when branches are used differently, what that does to branch formats, and we still have an appetite to invest in the branch networks because that's going very well for us."
The Commonwealth Bank spent untold millions of dollars launching its flagship branch in the Brisbane CBD mid-2011 that played host to a swathe of service staff along with a fleet of gadgets, including Apple laptops and tablets, as well as other touchscreen devices designed to present customers with a different way of physical banking.
Tech jobs safe at CBA
Narev also took the opportunity to reassure investors, analysts and staff that the Commonwealth Bank has no plans to initiate a round of major redundancies, despite the moves of rivals including ANZ and Westpac to cut staff.
"We do not have any plans for major redundancy programs, and we don't have any plans for offshoring," Narev said proudly, adding that the bank instead plans to focus on improving efficiency through the application of better technology and business processes.
"What we have plans for is continued commitment to what we've been doing over the last couple of years, to the continued strengthening of a capability which we are now demonstrating within our results and momentum of the business. That is by taking a process-by-process view of the group, applying new technology, applying process excellence principles and making our process better," he said.
Westpac is currently in tech job slashing mode, with 400 staff set to go from its head office, technology and operations divisions, while ANZ Bank has announced plans to cut 1000 staff over the next 12 months. ANZ, however, has told ZDNet Australia that technology jobs aren't part of the company's redundancy plans.