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Core Banking transformation: why it’s time to change

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541952_10151176949021770_532315995_nOver the last few weeks I have been reading and commenting on a number of discussions around the inability of companies, industries and people to undergo successful deep transformation. While I suspect the last class are the toughest, often IT programs are used as great examples of failed change initiatives and indeed our industry has provided some very good examples to support the case for failure. However, interestingly some of the great success stories are also used as examples of failure by those attempting to support the “too hard”, “do nothing” or incremental approach to change.

An excellent example of this is the world class programme of business and IT change at Commonwealth Bank of Australia. This Program was kicked off in April 2008 and was announced as a four year program with an estimated cost of around A$600 million. CBA is in the top ten globally in terms of market value and profitability but they just completed 5 years of serious heart surgery!

This month the bank completed the final major migration of the program - moving their Commercial loans business onto the new platform. This is an enormous accomplishment – and while it has taken an additional year and a little over A$1 billion in total cost (including some major additional scope items – eg. the whole banks payments infrastructure)- the bank has built a strategic asset which has put them on another level for an organisation of their complexity and scope.

6 big building blocks were key to this achievement:

  • Create a real-time platform which can deliver new products and bundles/packages of products & services - including all sorts of deposit and loan products, across the retail and commercial businesses of the bank and with Wealth and institutional business started on the path .
  • Move all customer data (SAP and non-SAP) into the same new enriched environment allowing support of the end to end process in real time (and decommissioned the old customer information system & interfaces)
  • Move/migrate almost all deposits and loans transactions onto the platform
  • Migrate all term deposits for Retail, Wealth & Commercial and decommissioned the old system.
  • Modernize the CBA Sales and Service layer to expose these products in a reusable service oriented and efficient method
  • Build a replicable migration factory/process capability for future acquisitions

Building a new bank or business next to the old is relatively easy and brings minimal disruption to existing business as usual – but real transformation and industrialization requires changing the whole entity’s end to end processes and reducing overall complexity and inefficiency while increasing its agility to quickly and cheaply react to inevitable change. CBA has “enjoyed” a journey which provides the lessons and limitations for how to successfully deliver transformation.

Is your bank meeting the evolving need of its customers? We’d like to hear from you

Robert Wilson - Global Head of Retail Banking - has been responsible for the global Retail Banking line of business within the Financial Services industry unit, since 2012, which is a $1 billion+ business for SAP. 


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