CommBank dives into $580m banking IT revamp

The Commonwealth Bank has announced today that it is embarking on a AU$580 million four-year program to modernise its legacy core banking systems and introduce new features with the help of SAP and Accenture.

The bank's back-end systems date back to the early 60s, Commonwealth Bank CIO Harte said, and are holding back change at the bank.

Customers wanting to bank online outside of traditional office hours, like weekends, see their transactions held back until they are processed during normal working hours in a batch process. The new modernised systems will allow real-time banking by removing these "monolithic batch-based systems", Harte said.

The introduction of some banking products will become faster, Harte said, such as home loans which can be issued in hours or days as opposed to weeks.

Modernisation will remove a lot of the manual handles and paper-based processes required to process transactions, according to Harte, making the system cheaper to maintain — savings which the bank has promised to pass onto customers.

While the modernisation will result in fewer middle office jobs, the bank is not necessarily expecting redundancies, according to executive general manager of core banking modernisation, Dave Curran. "We're not setting out as a head count reduction," he said.

The first step of migration will occur this year, with customers scheduled to see real-time banking in 2009.

Despite the modernisation work, the bank will still keep its mainframe at the core of its IT. "It's still very efficient, still very powerful," Harte said. Curran said however, that this will be reviewed over time, adding that the modernisation will make a migration from the mainframe much easier.

The bank will be using SAP for banking, based on Netweaver, and has appointed Accenture to support the implementation of the program. The reason for choosing SAP was the flexibility of its system architecture and the company's dedication to Web services, according to Harte.

The bank also looked at products from Oracle, i-flex, Finicle Infosys and TCS. "The usual suspects were interviewed," according to Harte.

Harte said that despite the length of the project being longer than the average CIO's tenure, he intends to stick it out. "I'm not an average CIO. The system's going to outlive all of us," he added

The bank has already undergone a revamp of its front-end system, resulting in IT savings of AU$200 million per annum, according to Harte.