The National Australia Bank (NAB) has ended the 2020 financial year with a near-50% drop in net profit but with a focus on digital, it looks to reap the rewards from its tech transformation project.
The red and black bank reported AU$2.56 billion in statutory net profit, down 47% from the AU$4.8 billion posted a year prior. Cash earnings were also down 37% to AU$3.7 billion, with business and private banking accounting for AU$2.5 billion of the total.
Revenue was also down 1.4%, mainly due to COVID-19-related fee waivers, NAB said.
Expenses rose 10.7% for the 12-month period, with NAB telling shareholders on Thursday this reflected costs associated with the implementation of its strategy refresh along with higher technology-related costs, including spend to strengthen the compliance and control framework, salary increases, and COVID-19 related costs.
In delivering its 2017 results, NAB promised an investment of AU$1.5 billion over three years in a bid to ensure the bank would be ready for the changing, "digital-first" world.
The strategy was focused on putting customers first, but it resulted in the loss of around 4,000 staff. At the time, NAB said 6,000 roles would be impacted as the bank "further automates and simplifies" its business, while 2,000 new jobs would be created as a result of the restructure.
The close of FY20 marks the completion of this three-year transformation program.
"Under this program we increased investment spend by AU$1.67 billion and focused on improving customer experience by reducing complexity, delivering greater digital capability, and establishing strong foundations in technology," the bank said on Thursday.
"Good progress was achieved, including cumulative cost savings of AU$1.2 billion, approximately 200 fewer products with 65% of simple consumer product sales now digital, a 7% reduction in IT legacy applications, 38% of IT applications migrated to the cloud, and a 70% reduction in critical and high priority incidents."
The bank said it was progressing well with its strategy refresh, which it said has created a "simpler, more accountable business, committed to execution". This is accompanied by a new organisational structure that's aiming for "end-to-end accountability".
"Our priorities over the next three to five years include simplifying processes and policies for home and business lending, creating simpler transactional banking, providing enhanced data and analytics to customers, and colleagues and growing our digital bank UBank," NAB said.
"We will also continue to enhance our technology resilience via insourcing and migration of IT applications to lower cost, more reliable cloud platforms."
In September, the bank announced the migration of its NAB Connect platform to the Amazon Web Services (AWS) cloud.
NAB Connect is touted by the red and black bank as a solution for businesses with more advanced online banking requirements. The platform allows for multiple account users and boasts uncapped payment transfers, using PayID; international payment and foreign exchange services; and third-party capabilities, such as through accounting software.
NAB has been an AWS customer since 2013, and around five years ago, the bank turned to AWS to start its multi-cloud strategy. Since then, NAB has laid the foundations to move its core banking function to the public cloud.
The red and black bank also has partnerships with Microsoft and Google for cloud services, with NAB previously touting its multi-cloud combination as helping the bank deliver new and improved experiences for customers. With Microsoft, NAB is aiming to send 1,000 of its 2,600 applications to Azure.
It also said previously that it wants to avoid vendor lock-in, but wants to leverage the capabilities of each cloud provider.
The bank has also sent over 1,400 of its staff through training across AWS, Microsoft, and Google cloud platforms.
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