1.4 Billion Reasons Why Finance is a Technology Game

Commonwealth Bank Australia investment in technology is up by 15% YoY.

SHARE

Screen Shot 2016-08-11 at 12.45.44 pm As Australia’s leading financial institution faces criticism about its decision to not pass on the Reserve Banks interest rate cut in the light of its announcement of $9.4 billion profit, CBA’s latest results also tell a tale of an industry in transition.

Although thwarted by its profit margins, the banking giant also disclosed $1.4 billion on IT spending. This is up 15% from the 2015 financial year, and up 40% from the 2010 release.

The growing trend of CBA investing in technology is in contrast to other areas of the business that have stagnated in regard to investment; its staff expenses increased by 6%, while its occupancy and equipment increased by just 4%.

Not only was the money moving towards technology, but the bank was also making a conscious effort to showcase its recent technology successes and return on investment.

CBA noted that 40,000 of its payment tablet hardware, Albert, was now in the market. Its Commbank app also includes ‘Instant Banking’, allowing new-to-bank customers to open an account and transact immediately.

In announcing the results, the Group’s CEO, Ian Narev, was forthright in laying out the challenges of the industry to be impacted by agile competition as well as a cooling house market:

“At CBA, we are cognisant of the combined impact of weaker demand, strong competition and increasing regulation. An on-going focus on productivity and credit quality will be important… We will continue to manage for the long term, putting customers first and investing for the future.”

The investment in, as well as the positioning of technology as being the forefront of strategy, provides an insight into just how much technology and digital innovation will impact the success of the biggest pillar in Australia’s banking system.

Technology is becoming relevant at a faster rate, which has the potential to see this presence only increase in the forthcoming years. As an example, global banking powerhouse Citi believes that automation technology could reduce the seat count of retail banks by 30% by 2025.