NAB accelerates its digital, data and analytics plans

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NAB accelerates its digital, data and analytics plans

As it builds on technology foundations.

NAB is accelerating its digital plans with further acquisitions and the continued rollout of a digital home loan platform.

The bank credited its investment and technology work over the past four-to-five years for better positioning it to combat cybercrime, and its use of digital data and analytics for improve consumer outcomes.

Speaking at the bank's 2022 half year results on Thursday, NAB chief executive Ross McEwan told investors it has “more than 60 percent of our apps migrated to the cloud”, and has made “strong improvements to our capacity to fight cybercrime and reduce [the number of] critical incidents.”

NAB reported $3.551 billion in statutory net profit in the six months to the end of March and a cash earning profit of $3.48 billion, up four percent from first half of 2021.

AUSTRAC undertaking drives up tech costs

NAB drew unwanted attention from financial crime regulator AUSTRAC in June last year over compliance, with McEwan stating the bank had accepted an enforceable undertaking with the watchdog earlier this week.

“Under the terms of the undertaking, NAB will implement a comprehensive remediation action plan to improve our systems controls and record keeping. We acknowledge AUSTRAC's concerns and we will get this right," McEwan said.

“Many of the activities reflected in the agreed plan are underway and expected to be delivered within 12 months.”

McEwan said NAB is expecting to spend up to $120 million to meet the undertaking's requirements.

NAB said these cost commitments, together with technology opportunities and inflation, will see NAB’s expenses rise 2.6 percent this year.

According to NAB’s chief financial officer Gary Lennon, “technology costs are higher half-on-half as a result of additional running costs associated with recently deployed systems”, while “investment spend is lower over the six months to March, at $649 million.”

Digital progress

McEwan added that “while we have made good progress on our digital propositions there is more to do”, with group executive of digital data and analytics Angela Mentis leading the bank's initiatives.

NAB’s investment “to improve the digital experience for customers” saw its unsecured business loan system QuickBiz relaunched.

The bank also implemented improved account opening processes, resulting in “an increase in the portion of accounts opened digitally from 23 percent to 35 percent.”

McEwan said a “small number of acquisitions” over the past year plus the launch of a cloud-based merchant payment portal, NAB Hive, will enable the bank to accelerate its strategic ambition.

NAB's proposed purchase of Citigroup’s Australian consumer business also means it “can invest in better systems to deliver market leading capabilities and drive product innovation” and work with a “suite of white label partners to expand their business and ours.”

McEwan said that over the next 12 months, NAB will focus on "completing the integration and migrating our UBank customers across to the 86 400 platform" it purchased.

McEwan said NAB’s home loan platform is “already driving significant time savings for customers and bankers”, adding that over the next two years the platform "will be used to write all of NAB's mortgages irrespective of the origination channel, delivering significant scale advantages.”

NAB “not immune” from tech talent sourcing struggles

NAB is still struggling to fill its technology vacancies, stalling its migrations and - along with inflation, regulatory costs and technology investments - adding to its costs.

McEwan told iTnews the bank is “not immune” from the pressures of finding tech talent, stating it's “very, very difficult.”

“We have a number of vacancies," he said, adding that, as a result, "we do see the cost of these resources are starting to move up."

“We're having to think about how we acquire this talent into the organisation in different shapes and forms," he said.

McEwan later said due to the health pandemic that Australia has “had two years without migration” and it was important to “re-establish Australia as an amazing place to come and work.”

Simplification progress

Speaking on the bank’s simplification strategy, McEwan said NAB is "probably about 25 percent through that program that we've laid out."

“It's a good start and showing really good dividends, but there's lots more to do," he said.

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