Norris exits: will CBA lose its tech edge?

commentary On Friday, Ralph Norris, chief executive officer of the Commonwealth Bank, announced his plans for a return to retirement and revealed that business banker Ian Narev would ascend the position in December. But will Norris' departure take with it the technology mojo that has given CommBank its real-time edge?

At a press briefing in Sydney on Friday, CommBank chairman David Turner assured attending media and analysts that while Norris' focus on customer service had led the bank to record profits and a leading market and share position, Narev was in an excellent position to continue the work of his predecessor.

"As you will see from his CV, Ian is excellently qualified to meet these challenges. He has spent the last two-and-a-half years as group executive responsible for Business and Private Banking, a significant division of the Group. He transformed the culture, created a first-class management team and increased the profile of both CommSec and the Private Bank areas. He has driven its revenue growth and profitability. Ian has also been a director of the Group's banking and insurance businesses in New Zealand for the past three-and-a-half years," Turner said.

Narev's other achievements include spearheading CommBank's acquisition of Bankwest in 2008, one of the Bank's largest and most important mergers to date. A lawyer by profession and a mergers and acquisitions specialist, Narev's appointment is sure to keep CommBank on the straight and narrow. But does that mean that he can continue to drive the bank's $1.1 billion IT transformation program set in motion by Norris?

Turner said that under Narev, neither the bank's focus on customer service, nor the ongoing technology transformation strategy, would change.

"It is important not to read into Ian's appointment any change in the group's strategy or focus. Serving our customers remains paramount. We will continue to be conservative and at the same time we will be sensitive to change in the external environment, while competing strongly in all the markets and segments we serve," Turner said, indicating that the $1.1 billion investment in technology transformation will continue. In short, Norris' departure from the bank is unlikely to affect the Bank's ability to complete its core banking transformation on time and on budget, but not because of the sole appointment of Narev.

Norris' tenure saw the appointment of many passionate technologists, including the Bank's chief information officer, Michael Harte, and its executive general manager of core banking modernisation, Dave Curran. The appointment of these two executives and the teams they have built represent Norris' behind-the-scenes push to use technology as a key driver to rebuild customer service at the Commonwealth Bank.

In 2008, Harte and Curran under Norris announced that the bank would embark on a four-year, $580 million core banking transformation project that would see the bank migrate from its old infrastructure built in the 1960s to a shiny new back-end built on SAP and Accenture kit.

Since then, the CommBank has been slowly trying to gain an edge over its competition, demonstrating numerous technology-driven initiatives to woo customers like next-generation banks and near-field communication (NFC) payments, all the while pouring more and more cash into the technology honey pot. At last count, the bank's $580 million core banking modernisation project is now worth $1.1 billion.

When asked about technology projects at CommBank, executives always recount how valuable it is having a CEO who understands technology as a business driver. Norris himself comes from ASB Bank in New Zealand, where he spent some time as its CIO. Norris is often painted as a hands-on member of the bank's technology transformation, so passionate is he to improve the way in which the bank does things.

Norris' views on the nature of the banking sector were made abundantly clear at a recent CommBank technology briefing, saying that customers will no longer put up with core-banking systems built in the 1960s with "overnight batch processes and regular delays" — something that the National Australia Bank (NAB) is all too familiar with.

Norris, it seems, has always led from the front, with technology transformation at CommBank, and hired enthusiastic people to re-enforce his vision, much like Westpac CIO Bob McKinnon's strategy of hiring a technology version of the "A-Team" to help with his bank's transformation agenda.

Ralph Norris attracted staff to CommBank like a bright light attracts moths, admits CEO-in-waiting Narev, who made it clear in his speech on Friday that he's ready to pick up where Norris left off.

"The opportunity to work with and learn from Ralph was one major reason I joined the group four-and-a-half years ago. The other was the enormous potential that I saw in this institution. Having now had the experience of helping drive its strategy, and then of leading one of its major businesses, I am more convinced than ever of that potential," he said.

"Through the financial crisis, I have seen that our history, brand, customer base and financial strength are unique among our competitors. Now we are adding to that a world-leading technology platform with our Core Banking Modernisation investment," Narev said on Friday.

Narev beat out candidates from both within the Commonwealth Bank and abroad, Turner said on Friday, after an 18-month search to find Norris' successor. He has been signed off at all levels of the bank, and it seems that shareholders have taken a tentative like to the appointment, with the bank's stock rising after Norris' retirement announcement on Friday.

However, Narev's appointment seems more about continuing Norris' legacy, rather than setting a new agenda for bottom-line success. Although he may take new steps to further the business and financial interests of the Bank going forward, given his specialisation in legal affairs and big acquisitions, the revamp of IT will likely just continue in the wings, spearheaded by disciples left behind by Norris like Harte and Curran and their respective teams.