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​NAB claims outages down by two-thirds

The Australian banking giant has posted a AU$352 million statutory net profit for the 2016 financial year and has praised its reduction in 'technology incidents'.

The National Australia Bank (NAB) has released its 2016 financial year results, reporting a 94.4 percent statutory profit slump to AU$352 million.

According to NAB, the technology investments it has been making are improving customer service, noting that such investments had been driving lower instances of "technology incidents" from FY13 through FY16.

This was reported on Thursday as a 79 percent reduction in "high" priority incidents and a 64 percent reduction in "critical" priority incidents.

The bank experienced the highest amount of both critical and high priority incidents in the second quarter of the 2013 financial year, and the lowest in the fourth quarter of FY16.

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NAB's "Critical" and "High" priority technology incidents

Screenshot: Asha McLean/ZDNet

Earlier this month, NAB experienced three system outages in the space of seven days.

The first hit its internet banking, customer call centres, and payments processing as a result of a "number of system outages" experienced the night before.

The bank's customers Australia-wide were then prevented from using their bank cards in ATMs or at EFTPOS terminals, with the outage also affecting NAB merchant terminals and its health claims and payments system (HICAPS), which is a payment solution for health care providers.

The third outage meant customers were unable to access their internet banking.

On Thursday, NAB Group CEO Andrew Thorburn touted the bank's "Priority Segments" Net Promoter Score (NPS), which he said lifted in performance from third to first among the major banks.

"We know customers expect simple and easy banking and we continue to focus on improving services and reliability," he said.

"NAB moves into 2017 a reshaped business -- stronger, simpler, and focused on helping our customers in Australia and New Zealand.

"These changes have been achieved while delivering an improved operating performance and maintaining a strong balance sheet, sound asset quality, and tight control of costs."

According to NAB, its foundation is built on a strong balance sheet, risk management, and technology.

NAB's cash earnings were AU$6.48 billion for FY16, which was an increase of AU$261 million year-on-year.

NAB said investment in efficiency and sustainable revenue projects increased by AU$119 million for the 12-month period, which it said was largely driven by an increase in spend on customer-focused digital solutions, enhanced measurement of customer advocacy and promotion, and "innovation" to improve the customer experience.

During the 2016 financial year, the bank completed its Personal Banking Origination Platform (PBOP) retail rollout, with approximately 8,000 bankers around Australia using the platform for new card processing and personal lending.

Previously, the bank said PBOP would form the final piece in its Nextgen technology transformation and the "biggest technology overhaul in the bank's history".

The bank worked with Oracle to deliver the platform.

Similarly, all of NAB's customers migrated to its new Retail Digital Banking platform in FY16, which it said is simplifying processes by leveraging new technology, and is expected to result in a 30 percent improvement of core operational processes this new financial year.

In the second half of the year, NAB piloted the use of process automation, seeing seven tasks currently explored and another 30-something to be delivered throughout the next 12 months.

The banking giant also launched Quickbiz Loans, a digital application process lending up to AU$50,000 to small businesses within 10 minutes. Also for small business customers, NAB launched a new cloud-based digital platform -- NAB Business in One -- that synchronises data in real-time across numerous applications including accounting, sales, and customer relationship management software, into a central, customisable dashboard.

In FY16, 76 percent of transactions were performed via digital channels, with 31 percent conducted via a mobile device.

Although the launch will fall under the 2017 financial year, NAB announced last month it had been working on a new banking app to allow its customers to turn off features of Visa debit and credit cards on the fly. Users will be able to temporarily block cards, turn off online shopping, disable PayWave functionality, and prevent cash withdrawals from ATMs. The new app is already available for Android users.

The bank also revealed its customers would soon be able to instantly use newly approved personal Visa credit cards, with a digital contract feature enabled in its new mobile banking app.

The new app comes as the result of a partnership Visa and NAB kicked off in November, with the bank saying it was able to save around six months of development time.

In June, the bank opened up its contactless NAB Pay feature within its current banking app to all personal Visa cards, and added the ability to use replacement credit cards within minutes of one being issued by the bank.

Also in September, NAB signed agreements with Israel's Bank Leumi and Canada's CIBC to enable the sharing of information, innovation strategies, and open up their respective networks with startup partners

In August, NAB announced a reshuffle of its organisational structure and management team, which it told shareholders on Thursday was in order to create a "simpler, more customer-focused" organisation.

At the time, Thorburn said the changes were part of the bank's "next stage of organisational change", given it has been two years since the team started addressing legacy issues.

"These changes will bring greater momentum and energy to NAB's goal of creating a simpler, more customer-focused organisation that delivers better outcomes for customers as well as shareholder returns," he said previously.

"We have had a very clear plan over the last two years, and have taken the action required to execute that plan. We have made progress, our customers are noticing the positive changes, and our staff engagement score is the highest it has ever been, but we need to do better. This new organisational structure will enable us to continue the pace of change while providing greater clarity for our customers and our people."

NAB posted AU$89 million in savings for the first half of the 2016 financial year, but acknowledged that more work still needed to be done.

Looking forward, the bank said it will continue to invest in software, with major investments currently being undertaken including further investment in implementing payment reforms initiated by the Reserve Bank of Australia, as well as regulatory compliance initiatives, and enhancing what it called the digital capabilities of the Australian banking franchise.