Rapidly growing customer expectations of real-time account visibility and mobile banking capabilities are validating a massive transformation agenda that saw Australia's largest business bank, the National Australia Bank (NAB) this year switch on the first private cloud services from its new data centre, adopt a new risk-calculation model, and begin offering new mobile and account products.
Since 2009, NAB has been working on what Enterprise Services & Transformation (EST) division head Lisa Gray explained is “the largest and most comprehensive of the transformation agendas of the major banks. It is all about reliability and accessibility for customers.”
The project – which involves broad consolidation of systems, upgrades to well-established mainframe and high-end server-based systems, improvements to voice and core networks, and the delivery of a broad range of new customer services and application programming interface (API) capabilities – will get a boost from “the fundamental completion of a lot of that infrastructure” within the next 18 months, Gray said.
One early benefit was the delivery of the NAB's own private cloud, which is hosted from a new data centre that consolidated 23 previous facilities into just two facilities, at Deer Park and Knox.
The data-centre transition would continue over the next 18 months, Gray said, as the EST team worked through unravelling the spaghetti of legacy systems.
“It's quite an ambitious agenda because we are touching many elements,” she said. “The complexity is replicating the patterns across all the different applications, scenarios and testing.”
“The interdependencies between different components is one of our biggest challenges, and getting the sequencing right. We need to make sure we have a strong cloud capability and that our infrastructure on demand is available.”
The NAB's private-cloud infrastructure – a core part of its NextGen banking platform – supports 600 branches and eleven head-office sites, as well as much of the bank's ATM business. Its NAB Connect business banking tool, as well as its Visa transaction handling, are being supported from the new facility with the two sites in an active-active configuration.
Customers have rushed to take advantage of the new capabilities being delivered by the NAB's made-over infrastructure. Mobile banking, in particular, has proved immensely popular, with the number of mobile banking logins growing 53 percent year on year and the number of mobile-banking funds transfers up 55 percent.
BPAY transfers increased 83 percent year on year, while the number of personal loan applications lodged via Internet banking increased by between 34 percent and 64 percent. Also proving immensely popular was Paywave, the Near Field Communications (NFC) based payment service that had grown in volume by 275 percent and transaction value by 313 percent.
The number of mobile banking logins grew 53 percent year on year and the number of mobile-banking funds transfers up 55 percent. Mobile BPAY transfers increased 83 percent year on year, while the number of personal loan applications lodged via Internet banking increased by between 34 percent and 64 percent.
Catering to the increasing expectations of customers has become the raison d'etre for EST, the 10,000-strong NAB division that accounts for more than 40 percent of the company's Australian workforce.
EST combines NAB's customer service, shared services, operations, transformation and technology operations, and includes responsibility for NAB businesses including personal banking, business banking, NAB Wealth and its products & markets business.
With much of the core infrastructure work now complete, new NAB chief information officer David Boyle – whose appointment was announced this week – will have his work cut out for him as the company continues its transformation agenda in the new year and beyond.
Boyle, a partner of Ernst & Young, was brought on three months after former CIO Denis McGee announced he would depart from the NAB after driving much of the NextGen transformation in previous years.
The NAB had shuffled its CIO responsibilities several times in the past, but when he starts at the bank in Februrary Boyle will "now run all of the technology," Gray said. "This includes our transformation capabilities, one of the main ones being our NextGen architecture, and our core banking replacement program."
Boyle previously served as a divisional CIO at rival banking giant the Commonwealth Bank of Australia and will report to Gray – who also recently announced the appointment of UK banking expert Bruce Hope-McLellan, whose resume includes transformation efforts for Lloyds and Serco, to drive the NAB's customer services initiatives.
Much of the upcoming agenda will involve the extrapolation of new capabilities from Ubank – the NAB-backed, online-only banking venture that moved its customers onto the NAB core in August 2012 and has become a de facto innovation hothouse for NAB's customer-service initiatives and new products.
For example, during 2013 the bank introduced the ability for Ubank customers to open new Ubank Usaver Ultra transaction accounts with a few clicks. NAB has also introduced a new credit risk engine, which is running in parallel for now but will facilitate straight-through mortgage origination and Basel III compliance as it begins to replace existing risk-management tools from 2014.
“This will enable us to manage risk across consumer as well as business operations,” Gray explained. “We can manage credit risk in quite a fundamentally different way. More insight and faster decision making will enable us to grow the business a lot more rapidly.”
"As you move more and more to mobile and digital, it becomes more and more transparent to customers. And we're working to make sure all the data is correct, because customers will have that greater transparency."
This change comes courtesy of NAB's investment in the Oracle Banking Platform (OBP), which was upgraded during 2013 to add significant new capabilities including the “foundations of mortgage origination.”
Other milestones reached during the year include the introduction of the NAB Flik mobile-payments app (which facilitates functions like bill splitting as a partial response to the Commonwealth Bank's Pi and Leo point-of-sale terminals); an upgrade to the bank's SWIFT systems for completing high-value global transactions; the consolidation of business-customer servicing into Business Bank Fulfilment centres; and the introduction of APIs that will allow NAB to introduce “more features, more easily, more regularly.”
Moving the NAB's Customer Contact Centre to its new campus in Melbourne's Docklands had been completed in just weeks, with an upgrade to the NAB's Virtual Contact Centre saving over $4 million.
NAB had also moved much of its non-confidential product information to the Amazon Web Services (infrastructure), facilitating delivery of information at large scale and allowing the NAB to focus on driving its transformation around the secure handling of higher-value financial information.
The change had paved the way for the bank to begin opening all new customer accounts on the next-generation banking platform from the end of 2014.
That movement will involve the transition of 4 million customers from the bank's legacy platform to the new environment within the next two to three years – including the consolidation of what used to be around 180 products to less than half that number.
“That's a very significant milestone for us,” Gray said, “in parallel with what we've been doing to rationalise our product range.”
The bank is currently designing what types of products it will offer through the NAB brand in the end of 2014 and early into 2015, and will then progressively look at how to put business-use products onto the new OBP platform.
“As we move more and more of our capabilities onto the new OBP, our customers are exposed to more and more of that,” Gray said. “Our belief is that, as you move more and more to mobile and digital, it becomes more and more transparent to customers. And we're working to make sure all the data is correct, because customers will have that greater transparency.”