Three major banks - the Commonwealth, the National Australia Bank and Westpac - are investing more than $4 billion in their IT systems to improve service delivery through new technologies including mobile phones and tablets, according to an article in this morning’s Australian Financial Review.

 

Interviewed for the AFR report, Michael Hart, chief information officer for the CBA, said banks had underinvested in the past to  keep costs low, and now needed to spend to catch up.

 

The report found that IT accounted for 11% -15% of  banks’ costs for 2010,  making it the second largest cost item to staff, but IT strategies were rarely featured in  results briefings.

 

In an overview of the three banks’ IT strategies, the AFR reported that the CBA is spending $1.1 billion to replace its entire  system and the software it supports, a process that started in 2008.

 

Westpac is spending an estimated $2 billion to upgrade its range of software and integrate the system, but retain its different brand identities – Westpac, St George, Bank SA and the Bank of Melbourne.

 

NAB is spending $1 billion on a new operating and software system called NextGen.

 

The AFR reported that the other major Australian bank, the ANZ Banking Group, is avoiding an IT overhaul, saving on the investment cost but risking falling behind its competitors.