The National Australia Bank has poached the head of internet banking from rival Australia and New Zealand Banking Group to head a new direct banking and marketing division almost four months after 10 senior technology staff were jettisoned in a sweeping operational restructure. Former Fairfax Digital executive Sam Plowman will take up the role of executive general manager at NAB's Star Direct & Marketing arm, which includes the retail institution's internet-only play, UBank.
The appointment of a new head of direct banking comes at a pivotal time for Star Direct, which is trialling new core banking technology that NAB could ultimately roll out across its entire Australian operation.
Mr Plowman's appointment puts him at the same level of seniority as NAB's recently appointed chief information officer, group services, Adam Bennett.
UBank's chief executive, Gerd Schenkel, will now report direct to Mr Plowman, who in turn reports to NAB's group executive for personal banking, Lisa Gray.
The installation of Mr Plowman to test-drive NAB's Oracle upgrade is understood to have surprised many inside the bank because he has a much stronger record in media and marketing than financial services.
Known as i-Flex, the core banking platform has previously been cited by NAB's former Australian chief executive, Ahmed Fahour, as a key component of a much wider legacy systems overhaul estimated to cost up to $1 billion.
UBank's test drive of i-Flex has been budgeted at $30 million.
In an interview with The Australian Financial Review, Mr Schenkel said UBank's implementation of i-Flex had been completed with the launch of the new USaver accounts on August 6 and had been a success.
"We spent quite some time designing the product and the underlying systems based on customer knowledge," he said.
"We are very happy with the performance of the product and the system because our customers are happy with it."
Mr Schenkel said UBank was created in the expectation that its target customers were comfortable splitting their banking across several institutions and the majority of its account holders had joined the bank from rival institutions since the launch.
"Almost all of our customers have come from external sources," he said. "The business is performing significantly better than we expected both in terms of the acquisition of customers and the deposit book itself."
In launching UBank, NAB enlisted the help of actuarial advisory group Quantium, which specialises in measuring the real-world success of marketing campaigns and weeding out less profitable customers.
UBank drew attention for its use of social media networks in its launch campaign. It has a Twitter feed, a Facebook page and a dedicated YouTube channel.
Questions have been raised about the quantifiable benefits of such a campaign, but Mr Schenkel said the strategy had delivered a number of pay-offs.
"We achieved quite a high amount of traffic on the first few days of launch without any other advertising being in market. We actually sold quite a large number of products on the basis of the social media engagement alone," he said.
Another innovation NAB claims that UBank and its USaver accounts have achieved is the introduction of paperless electronic verification to NAB. The process lets customers verify their identity for the purposes of establishing a bank account entirely online without the need to visit a branch or physically sign documents.
As a practice, paperless verification has the potential to achieve big savings for the retail banks by cutting administration costs, but many institutions have remained cautious about the approach because of the potential for identity fraud.
The Australian managing director for internet security company Symantec, Craig Scroggie, said every three seconds an identity was stolen.
"A passport or a birth certificate is enough in this country to meet the 100-point identity check and in the context of creating an identity it's not that difficult to get those pieces together," he said.
"It's probably no more difficult in the online world than it is in the real world today to steal an identity."
Paperless systems were pioneered in Australia by high-interest, online savings account provider ING Direct in August last year. Electronic verification has since been adopted by a handful of others.
Mr Schenkel said the company had invested heavily in the design of the new paperless system.
"We have come up with a process whereby almost anyone in Australia can satisfy the requirements without visiting a branch, without paperwork, without visiting Australia Post - entirely online," he said.
NAB launched UBank with its first product, personal term deposit accounts, last year. In February, they launched self-managed super, followed by USaver. Mr Schenkel said the process of electronic verification was now operating only in the savings space but could be more widely adapted across other products. Australian Financial Review