Westpac Banking (ASX:WBC) Corp is set to reduce its technology stack by two-thirds, a move announced in conjunction with its 2023 full-year financial results.
This reduction is part of a broader strategic initiative to simplify the bank's operations and enhance customer service.
Chief executive officer Peter King emphasised the centrality of customers to the strategy, highlighting the bank's commitment to providing a more intuitive and digital banking experience.
Issue lies in the excess.
Westpac's investment of approximately A$2 billion over the past four years has been allocated towards technology simplification and risk regulation.
King outlined that the bank's technology was not inferior to its competitors; rather, the issue was in the excess.
By reducing the number of technology components from roughly 180 to 60, Westpac anticipates improvements in cost efficiency, operational risk and market responsiveness.
Simplification process
The simplification process will be overseen by both business and technology divisions within Westpac and will adopt a modular approach for added flexibility.
King pointed out that the bank's success would be measured by improvements in return on tangible equity and market-aligned business growth.
In the past year, Westpac has made significant strides in operational efficiency by decommissioning 200 applications, consolidating data centres and automating numerous customer interactions, which led to substantial expense savings.
Final phase of transformation
The bank has also received positive assessments from Promontory Australia regarding its Customer Outcomes and Risk Excellence (CORE) program.
With the majority of activities within the CORE program marked as complete and effective, Westpac is now entering the final phase of its transformation.
The latest reports also coincide with a notable increase in net profits, posting a 26% increase to A$7.195 billion compared to the previous year.
Westpac's continued investments in digital capabilities and its strategic focus on technological consolidation are expected to position it strongly for future growth and efficiency enhancements.