Commonwealth Bank of Australia CIO Michael Harte says growing consumer appetite for more sophisticated online services will challenge how large businesses develop technology. He says big organisations will need to bring tech spending much closer to customers, rather than maintaining decades-old legacy systems.
"We are seeing a fundamental shift in how people want to interact electronically," Harte says. "They want a real-time experience … whether that is on a mobile or on the web."
He says large organisations generally face "a real problem" in matching consumer expectations because of legacy systems built using technical architecture that is up to 40 years old.
A key issue with such systems is that they are built to run individual products that carry stand-alone account numbers, rather than allowing businesses to look at the total value of a customer across products.
Harte's comments come as Australian retail banks are increasingly forced to deal with customers using smartphones to make transactions on the move.
The shift to mobile banking platforms is a challenge for financial institutions because they must be able to render them on constantly changing devices while nailing down potential security holes.
A further issue is providing mobile access to a broader range of financial services while getting back-end systems to respond quickly enough to make the experience rewarding.
CBA is spending more than $750 million building a new core banking system that it says will create a real-time platform revolving around the customer, rather than disconnected products and accounts.
NAB is spending about $1 billion on a similar overhaul; Westpac will start to upgrade its core systems in about two years.
The push to base technology on customers rather than products offers the big four banks a significant opportunity to improve profitability. A key benefit is that banks and financial services providers can start to offer products at far more competitive prices that reflect both the risk profile and loyalty of a customer, and therefore their contribution to the bottom line.
The ability to use technology to craft unique offers quickly that can use pricing based on total value is a key competitive edge.
This is because it greatly lessens the chance of customer defections and increases the likelihood of a client transacting more business with a bank.
To comment on this article, please email the editor.
Follow CIO on
Sign up to receive CIO newsletters.
Click here to subscribe to CIO.
Join the CIO New Zealand group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.