Australia and New Zealand Banking Group's technology costs rose $16 million over the past year, according to documents released this week, largely due IT contractors hired to upgrade its risk management systems.
The bank's chairman Charles Goode justified the increased IT costs as part of the bank's effort to remediate a backlog in technology investments.
"A number of deficiencies in our institutional division in risk management and operational controls were identified and remedial action is being taken," he said. "We are addressing a backlog of expenditure in our technology and systems."
The bank's $609 million technology costs represented 10 per cent of its $5.7 billion operational expenses bill, which was up $743 million on last year, according to ANZ's annual report released yesterday.
The remediation efforts have contributed to the $73 million in IT contractor fees ANZ racked up for the year. All other expenses remained relatively flat, including software which cost $131 million, rental and repairs at $81 million, and $69 million spent on data communications.
ANZ's CEO Mike Smith said the bank would need to make a philosophical gear shift to bring its technology to a world-class standard.
""We need a different philosophy to bring us up to the levels of technology used by banks globally, not just in Australia or New Zealand," he said.
ANZ also outlined its technology committee which provides guidance on IT projects valued over $50 million.
Ex-governor of the Reserve Bank of Australia and one of four members on ANZ's technology board, Ian Macfarlane, has been involved in three committee meetings to discuss the bank's progress on major technology projects, including its technology strategy proposed for its new headquarters on Collins Street, Melbourne. David Cartwright, group managing director for ANZ's operations, technology and shared services, who was hired in 2007, represented the bank's executive team on the technology committee.
ANZ has yet to make a decision regarding efforts to cut operational expenses that are likely to affect the bank's IT staff. Last week, amidst a hardware failure that knocked out the bank's ATM and EFTPOS network ANZ was under pressure to reveal how many staff would be cut go as rumours circulated that as many as 3,500 staff would go.
A spokesperson for ANZ said the bank was yet to make a decision, but that cuts would target middle management, while the only job type likely left unaffected would be customer-facing roles.
Unlike its major rivals, the bank also has yet to discuss publicly any plans to replace its core banking systems in Australia.