National Australia Bank has embarked on a $1 billion information technology overhaul after it yesterday confirmed it had selected US multinational Oracle to provide software for the $30 million first phase of the project. NAB Australia chief information officer Michelle Tredenick also confirmed that the project would take close to five years to complete as the bank attempted to minimise the risk of upgrading systems at the heart of its Australian operations.
The revamp will replace NAB's core banking system, which is linked to internet, ATM, teller and lending platforms and is used to process debit and credit transactions.
Most major banks in Australia will need to replace their core banking technology over the next five years and the Commonwealth Bank of Australia has already committed to a similar initiative that will cost $580 million over three years.
The Oracle win, flagged by The Australian Financial Review ahead of yesterday's announcement, marks the end of an 18-month scoping process and a hard-fought contest between the American firm and India's Infosys.
NAB will work to install Oracle's i-flex core banking technology in its Star Direct online unit while it plans for later stages of the project that will include the replacement of its core transactional platform.
"This is a significant investment for NAB and we'll take a very phased, very measured approach over the next five years," Ms Tredenick said.
"Phase one is twofold. Firstly we're going to work with Oracle to deliver the platform for our Star Direct business. Secondly, we're going to work with Oracle to plan over the next six months our core banking replacement program."
Ms Tredenick reiterated earlier commitments from NAB that it would pay for the replacement of its core banking system over the next five years from its existing capital and operating budgets.
She said that the $1 billion NAB would spend on Australian technology projects included investments in a number of other information systems, although the bank had yet to finalise its plans.
Ms Tredenick did not give a cost estimate for the core systems replacement component of the program, but it is likely to account for the bulk of the $1 billion spend.
"Where we're at in the planning cycle is that we're talking about having a look at our risk and finance platforms, for example, but that would be towards the end of the program. Another area is desktops," she said. "So [the overhaul] covers all aspects of the technology that supports the group in Australia."
Ms Tredenick said NAB would use its own workforce and Oracle employees to complete the Star Direct software roll-out, as well as the core banking system replacement program.
The information systems department was united behind the initiative, Ms Tredenick said, despite the fact that some technology workers had favoured Infosys as a core systems supplier while management had leaned towards Oracle.
· Oracle beat Infosys as supplier for phase one of the upgrade.
· NAB will upgrade systems over five years at a total cost of $1 billion.
· The bank will fund the upgrade from its capital and operating budgets.
Fairfax Business Media