Westpac moves IT to the back office

Australian bank Westpac is to carry out an organisational reshuffle which will see its IT department move from the forefront to the backseat of the organisation.

In a statement to the ASX , the bank said the IT department would be moved to a new Group Services division, which will also include banking operations, property services and legal and will be led by group chief operating officer John Arthur.

The second division, Australian Financial Services, will include Westpac retail and business banking, St George banking, BT Financial and banking products and risk management. The division will be led by current RBS chief executive UK retail, wealth an Ulster Bank, Brian Hartzer.

According to the bank, the new services division in particular will bring together critical support functions while providing a centre of excellence for productivity.

Westpac CIO group executive, Bob McKinnon, will work with Arthur during a transition phase having decided to step back from Westpac’s IT transformation, according to the bank. McKinnon’s new role will be as enterprise executive, Group Services.

“In John and Bob, we have two seasoned executives with a record of delivering strong commercial outcomes,” CEP Gail Kelly said in the statement.

“Over the past three years they have worked closely on a wide range of critical projects including IT transformation, merger integration, our strategic investment priorities portfolio and more recently our new sourcing plans.”

The sourcing plans were discussed at the bank’s AGM early this month and were described by Kelly as a means of taking risk away from the bank and placing it on suppliers.

“We are changing the model and actually taking pieces of work — applications maintenance and other functions — and working with suppliers that they own that function and then measure them on an outcomes basis,” she said.

“That way we actually get the flexibility and scalability of that scenario and we can actually reduce our overall fixed costs; we get innovation and the value-add that suppliers bring. It is quite a significant change to our supplier model, but it does have some upfront costs.”

Kelly also noted that the bank had hit the halfway point in its Strategic Investment Program agenda.

“For us we have gotten to the end of the first stage of the [SIP] we set up in 2008. Phase two is very much about driving value from the position we have established, further investment and delivery in the platform we already have,” she said.

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