Australia's Westpac says a A$338 million programme to integrate its IT with recently acquired St George Bank is progressing well but warns the project could yet throw up unexpected costs that would diminish merger benefits.
In its first half interim financial statement, the bank reported a 1.2% fall in net profit for the six months and cut its dividend, with CEO, Gail Kelly, saying the bank will look to reduce expense growth. However, Kelly says investment in the development of the bank's technology infrastructure will be prioritised. WestPac says it has now finalised its IT strategy which will "leverage existing applications and systems across both St George and Westpac". The merged group has already spent A$30 million on technology integration during the last six months. Secure e-mail connectivity between the two banks has now been established while a virtual desktop has been implemented to enable St George employees to access Westpac systems and vice versa. Kelly also hailed the influence of the bank's technology chief, Bob McKinnon, the former Commonwealth Bank CIO who joined last August. She told reporters that technology has been a "big focus" for the bank in recent months, with the IT environment seeing improved reliability and stability. Westpac says the St George integration, which in total is expected to cost around A$700 million, has already delivered A$22 million in savings, including through "early technology synergies". However, it warns that the integration of technology platforms could yet throw up unexpected costs "that could delay or diminish the anticipated benefits of the merger". The bank also revealed it has cut 769 employees from the product and operations, technology and group business units, due to streamlined management structures and the completion of projects.