CBA extends core banking deadline by one year as costs skyrocket
10 February 2011 | 10852 views | 0
Commonwealth Bank of Australia has extended its core banking tech modernisation programme by a year, and upped spending on the project to $1.1 billion, almost double its original estimates of $580 million.
CBA first outlined plans in April 2008 to move core banking operations to the SAP for Banking platform under a four-year, A$580 million programme. In 2009, the budget was extended by $150 million to cover the inclusion of subsidiaries Auckland Savings Bank and Bankwest.
In a half-yearly results presentation yesterday, CBA admits that "areas of added complexity" have extended the delivery timeframe by a year.
The bank says it achieved a significant milestone this year with the successful national launch of retail saving and transaction account functionality to the new system. CBA now has over 11 million accounts and over $100 billion in balances operating on the SAP platform with improved functionality such as instant account opening and immediate product switching capabilities.
As the bank switches attention to the migration of business accounts and lending products it says it has spied opportunities to add functionality over and above what what was initially scoped, including a switch to multi-entity enabled processing. This should make it faster and cheaper to ultimately include the offshore banking businesses.
However, the new functionality is not coming cheap, with the total spend on the project ballooning to over $1 billion.
The experience of Australia's banks in migrating to new core systems is being keenly watched by other Tier 1 banks, which continue to operate on decade's-old legacy technology.
In October, Australian banking giant Westpac set back by four years the timetable for migration of its core banking platform to the Hogan system used by its subsidiary St George as it set out a complex roadmap for technology change entailing substantial integration work and the decommissioning of multiple legacy platforms and data centres at the bank.