Jahangiri: Given the major banks are currently undertaking core banking modernisation initiatives, what was the most notable challenge with Bank of Queensland’s (BOQ) own core banking replacement project and how was this overcome?
Stabback: BOQ implemented its current core banking platform, based on Fiserv’s ICBS product, in May 2004. The Core Banking Replacement Programme included a customer-centric business solution. The Programme was a critical enabler for the aggressive BOQ interstate expansion programme and because of this time imperative, some notable challenges needed to be dealt with, including and especially data migration (obviously common to all major core system migrations), building and testing the myriad interfaces to interconnecting systems, and a compressed delivery timeline that effectively required that it be delivered over a single weekend.
These issues can only be managed by assigning high-quality people capable of detailed and rigorous planning and execution. Clear and consistent communication and business engagement, together with an emphasis on change management, training and customer communication were all critical delivery success factors.
Core banking replacement programs are never seamless, but we are now very satisfied with our own platform.
Jahangiri: In late 2008 BOQ announced it would embark on a major cost-cutting initiative valued at approximately $50 million. How is this progressing and which areas within the IT department have had their costs reduced?
Stabback: BOQ first announced its cost-cutting initiatives in late 2008 with the first phase of cost reductions occurring in early 2009. Some of cost reductions were of a one-off nature but many had sustainable benefits, which continue to deliver bottom line value.
Phase 2, which is well underway, focuses on achieving more sustainable efficiencies through the review of many of our commercial arrangements with third parties, and reviewing key systems and core processes for long term efficiency improvement. We are clearly driving towards operational efficiency as this can include targeted investment for improving the overall performance of the organisation.
The results of the cost-cutting efficiencies can be clearly seen when comparing the cost to income ratio of 58.7 per cent for the first half of 2008, to 45.8 per cent for the last half of 2009. The overall goal for 2010, for which we are on track, is to drive to the mid-40s. This is a really significant improvement over a very short period of time.
For IT specifically, initiatives included better demand management, for example, review and optimising data storage, as well as renegotiation of a number of our major services arrangements.
IT will play a leading role in unlocking the next phase of efficiencies by initiating and leading some significant pieces of work over the next couple of years for step change improvements in system and business processes.
Jahangiri: What are your top IT priorities for the year ahead?
Stabback: Our top IT priorities are all about enabling our business success. Clearly, we are passionately committed to providing our customers a better and more personal banking experience, and our IT plans are aligned to making sure everything we do supports this outcome.
For IT, the priorities that enable and support our business success are driven by three things:
- Delivering high quality customer service experiences every time;
- Continually improving cost control (including more dynamic control over cost drivers);
- Driving functional differentiation (that is, investing in and doing the things that matter to our customers) and enabling operational business efficiency.
Jahangiri: BOQ recently announced that it will review its third party relationships. How will this impact BOQ’s IT outsourcing agreements?
Stabback: BOQ has a number of strategic relationships with various IT service providers, which have all been subjected to an enterprise-wide sourcing review.
From the outset we avoided setting our sights on outcomes that simply looked for price reductions. Instead we considered broader issues such as how our IT spend was contributing to our business objectives and driving value and enablement, as well as how to reduce the proportion of fixed costs in our sourcing model.
The majority of our IT services are outsourced to HP and as such they have played a key part in our consideration of how best to improve the effectiveness of our IT services.
The bank did not set out to renegotiate the outsourcing agreement, but have worked with HP and others to modernise the commercial and operational aspects of the agreement to better align to our strategic imperatives.
Throughout the process we agreed to some key guiding principles. Final detail is still being worked through, however in essence the outcomes will give BOQ more control and transparency over our outsourcing costs and drivers, as well the capacity to make targeted investments in transformational projects to be executed over the next 12 to 18 months.
Jahangiri: BOQ’s mobile banking solution was recently recognised as Australia’s best by an industry awards programme. What makes BOQ’s mobile banking “the best”?
Stabback: Three key things - access, functionality and compatibility!
Access – it had to be easy, no messy java download or complicated registration processes. Additionally, we did not see mobile banking as a separate channel option for our customers but a natural extension to internet banking. Consequently, all customers with internet banking automatically had access to mobile banking with the same user ID and same security credentials.
The benefit of this approach allowed us to meet our second driver – functionality.
Unlike the banks that have launched a stripped down service, BOQ launched a full function service offering account information, transfers, BPAY and ‘Pay Anyone’ functionality.
This has been particularly useful to our business customers who are now able to authorise any transactions remotely via the telephone.
Finally, compatibility was important to us as we did not want to limit the range of compatible handsets or have to force our customers to change their current phone. Accordingly, we chose to deploy a browser-based solution (optimised for touch interfaces like the iPhone where necessary) keeping the technical requirements really simple.
Jahangiri: What do you consider to be the major disruptions in retail banking right now?
Stabback: Managing the information and relationship demands of the next generation. The arrival of customers born in the 1990s who have grown up with instant-on and everything-connected information experiences – “The Internet Generation”.
These new and emerging customers will rightly expect that all and any interaction is available, related and relevant. They will sensibly require organisations to know them, understand them, and relate their products and services to them individually – treating them with personal and unique care such that every single interaction (be that via web, phone, in person or in any future medium) is constructed to be relevant and timely.
Information analysis and relational requirements will be significant and require an architectural platform that can reach all aspects of the organisation.
So while this problem is not unique to banking, the implication of this across all products and services will be highly disruptive and encompassing.
The challenge will be executing a seamless change across all systems, platforms and applications to provide this complete and single view of a customer, its interactions and service requirements.
Jahangiri: What emerging technology trend are you keeping an eye on right now?
Stabback: The disruptive technologies which we are currently monitoring include cloud computing, social software and networking, smart phones, unified communications, and evolving web architectures and technologies.
We are actively planning on the delivery of virtualisation, blade server rationalisation and expansion of our business process workflow tools.
Jahangiri: The big four continue to make headway in the contactless payments space. Is there a market for contactless payments at BOQ?
Stabback: The introduction of contactless payments in Australia is in its infancy and has not yet gained significant momentum with respect to uptake by either merchants or consumers.
While we see benefits in the new technology and believe it presents an exciting opportunity we will not be making an investment in the initiative at this early stage as we have a large portfolio of projects already underway in the payments space.
We will, however, monitor the development of the contactless payments market very closely and will reconsider our appetite to invest in this space as demand for this service is proven and true market momentum gathers.
Jahangiri: What has been your proudest achievement since you started at BOQ in September 2008?
Stabback: Our ability as an organisation to adapt and respond to the challenges of the last 18 months, and to emerge from this period with continued strong performance, as well as a strategy for our ongoing success, is something I am very proud to have been a part of; I am proud of the contribution my team has made during this period. At the same time, I am delighted that we now have an IT strategy that is strongly business aligned, and one that will deliver change through a number of important programs over the next few years – a strategy that will enable really significant improvements in both our customer’s experience with the bank as well as enabling step change improvements in operational efficiency.
Jahangiri: Every IT leader, particularly at your level, has a legacy they wish to be remembered for. What is yours?
Stabback: I expect that most people want to be remembered for making a positive difference during their time in any role – to that extent I am no different. Importantly, I would like to be remembered for making that truly sustainable through the development of a well understood strategy and delivery of real business value, as well as – most importantly – a high-calibre team.