Whilst the very real threat of technology behemoths such as Apple or Google crashing in on the banks' domain was enough for Commonwealth Bank (ASX: CBA) and NAB (ASX: NAB) to see the need to replace their core banking platforms, it appears that is not the case with Westpac (ASX: WBC).
Instead, Westpac's top technology executive, Clive Whincup, has conceded that the bank has other key priorities such as completing its online transformation, building infrastructure to allow for expansion in Asia and overhauling its core investment platform in its BT Wealth division.
Whilst the core platform upgrade is "still absolutely on (the bank's) radar" and something that they aim to achieve down the track, it has deemed that these other upgrades or investments are more important to the bank as well as to its customers.
Part of Whincup's reasoning behind this is that he believes that it is "foolish" and "a little arrogant" to believe that technology alone could be a strategy. As quoted in The Australian Financial Review, he said technology is seen by many as "an identifiable, isolated stream, as if it delivers benefit by itself… Well frankly, it doesn't." In contrast, the bank's wealth core upgrade is necessary as it recognises that there could be a $7 trillion superannuation fund in Australia by 2033.
Whincup has previously advised that what customers want is a "reliable service that is simple to use and always on tap, irrespective of where they are or what they are doing." Therefore, if technology investment would visibly improve customer service or experience, then it would be sensible to prioritise. One example of this is the bank's focus on mobile apps, whereby it recognises more and more consumers are trending towards devices run by Google's Android operating system.
In the meantime, one of the bank's other key priorities is the Reserve Bank's new payments platform that would allow for real-time payments between institutions.
Foolish takeaway
Make no mistake, companies such as Apple or Google do pose an enormous threat to Australia's major banks. However, whilst it is a positive sign that Westpac acknowledges this, it is also a good sign that it is not just going with the crowd and are focused on delivering an excellent service to customers.
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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.
