NAB reshuffle sees new technology head

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NAB reshuffle sees new technology head

Management team defends NextGen project blowout.

National Australia Bank says its technology transformation program is progressing well, after announcing a major restructure that will see current personal banking head Lisa Gray take on responsibility for the project.

The reshuffle will see Gavin Slater, who was overseeing the NextGen project, moved into Gray’s former role of group executive, personal banking.

NAB head of finance Mark Joiner, who was once tipped as a potential candidate for the chief executive role prior to the appointment of Cameron Clyne, will retire at the end of the year after seven years with the bank.

NAB said in a statement that by simplifying its technology and centralising its operations and support functions it expected to save up to $800 million a year, but it was short on detail on exactly where the cost savings would come from.

The bank is four years into what it recently said would be a ten-year rather than the originally planned five-year technology transformation project.

Clyne told analysts today that the bank had expanded the scope of its technology transformation project, and argued the project was now far more comprehensive that what was being undertaken by competitors.

"Core banking is a very thin slice of what we're doing," he said.

Business services executive Gavin Slater said it was likely the transformation project was never going to be a five-year project.

"As we came in and looked at our total environment we expanded the scope of NextGen," he said.

"You can put new technology into an organisation, but if you put new technology into an old organisation, with old ways of doing things, old structures, processes, policies and practices, you will end up with an expensive old organisation."

On the current trajectory, it will not be until 2016 that NAB will start to decommission its old legacy technology, with many of the cost benefits promised not emerging until 2017.

Clyne told analysts the bank felt it was ahead of its competitors on technology transformation, but added the market probably wouldn't know who was in front for at least a decade.

"We think we'll be ahead, but obviously time will tell," Clyne said.

NAB head of enterprise transformation Adam Bennett said rather than focusing purely on core banking, the bank was "doing the whole apple".

Both Slater and Clyne were at pains to point out NAB is not only partnering with Oracle for its transformation, but also SAP, Telstra and IBM.

Bennett said people spent a lot of time focusing on NAB's relationship with Oracle, but really it was no different to the one many companies had with tech firms where they paid software licencing and annual maintenance fees.

He did however say that NAB had relationships at a far more senior level with Oracle, as a result of their partnership.

"Mark Hurd has come and presented to our board, likewise Gavin has gone and presented to the Oracle board. So we have this relationship that is good for two reasons; one is it maintains the partnership, but secondly it's also an entrée into the rest of Oracle.

"So we're already now getting far more leverage out of their $5 billion R&D budget. We're able to direct that on to other things in our environment and that’s starting to happen," Bennett said.

Clyne said he was not concerned that other Australian banks might take advantage of the IP provided by NAB to help Oracle build its banking suite.

"We hope that they get 100 banks because the reality is what we want is all the intellectual property going to all those banks to ensure the system's constantly refreshed. What we want is a very easy upgrade path as that new capability's deployed."

He added that the challenge of any technology transformation had to do with legacy systems as much as new technology.

"The complexity of it is actually unwinding all the legacy, that’s where you can't play catch up. Just because you’ve got the code doesn’t mean you can then turn around an implement it any faster."

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