NAB credits lean processes for lower staffing demand

NAB has credited its adoption of the Kaizen continuous improvement framework for reducing its staffing requirements by 1894 full-time roles in the 12 months to 31 March.

The group today reported a 4 percent drop in full-time equivalent employees, including 186 in wholesale banking through efficiency savings across support functions, technology and operations.

Personnel expenses fell 2.5 percent from $2.32 billion in the six months to March 2011 to $2.27 billion this six-month period.

NAB attributed the decrease to “a continued focus on efficiency programs” across the group, as well as productivity improvements and process simplifications through its Kaizen@NAB program.

Derived from the Japanese word meaning 'change for the better', Kaizen is a lean business process management framework that, like the Agile software development methodology, hinges on continual, incremental improvements instead of large-scale overhauls.

Last June, NAB consultant Rob Thomsett said the bank had dumped steering committees and time-consuming business case building exercises for faster, Agile software development.

NAB today posted a half-year profit of $2.05 billion (pdf), down 15.5 percent from the previous corresponding period.

Chief executive officer Cameron Clyne said the group continued “to make progress against its strategic agenda and transform the way it does business”.

“Cost growth was managed to below revenue growth in spite of subdued market conditions and the ongoing technology investment program, and the group remains committed to pursuing sustainable productivity improvements,” he said.

NAB said its Next Generation Banking IT Platform (NGP) accounted for some $116 million of software costs in the six months to 31 March, as well as most of its $309 million infrastructure spend.

It appeared to have ramped up its NGP spending during the six-month period, after spending $205 million on software for the platform in the entire 2010-11 financial year.

The NGP is based on Oracle technology and expected to replace NAB’s core banking systems and retire more than 100 legacy applications by 2014.

NAB told investors today that it had successfully implemented a “major technology foundational release” of the platform and leased a new data centre to support its technological improvements in the six months to 31 March.

“The transformation of the group’s technology operations environment gathered momentum and is on track to deliver improvements in cost efficiency and a reduction in operational risk,” it stated.

“Notably, the group’s Next Generation Banking IT platform has successfully implemented a major foundational release of a broad set of underlying application components.”