Westpac has warned of a potential increase in the risk as it begins a $2 billion, multi-year program to simplify its technology environment and decommission around 120 legacy systems.
In March, Westpac unveiled the $2 billion Unite program, which aims to reduce the number of tech platforms and systems. The program will run between the financial years 2025 and 2028.
Speaking to investors during a live webcast, Westpac CEO Peter King revealed the bank has already begun consolidating the number of identity verification systems from 22 to one.
It has also moved all customer files into a common API-accessible platform, which King said will see Westpac move from customer masters (data management) to one.
Lastly, King revealed that the consolidation of Westpac’s collections platforms has begun, which King said will “help narrow our cost-to-income ratio gap”.
“We’re not starting from scratch.” King added. “It’s about accelerating the pace of the program. In 2024, we’re focused on planning, ramping up resourcing and commencing the first phase of projects.
King said the use of “legacy systems” as well as the tech uplift work “may heighten the risk” of a tech malfunction, alongside regulatory non-compliance and “poor customer outcomes” as the program progresses.
But the bank is also at risk if it does not progress the work.
Errors in Westpac’s systems featured in an Australian Securities and Investments Commission (ASIC) case launched in the Federal Court.
The regulator notably stated that Westpac lacked a “consolidated system view of customers for collections and hardship, and inadequate progress in business (and technology) simplification of the multi-brand, multi-systems legacy environment due to years of under-investment”.
Westpac saw its tech expenses rise by 30 percent to $1.3 billion during the six-month period ended 31 March 2024.
This, Westpac said, included a $192 million increase in software amortisation related to “the completion of major growth and productivity investments”.
Westpac reported higher software maintenance and licence costs of $113 million, which the bank attributed to greater business demand and larger third-party vendor costs,