Westpac Banking Corp (ASX: WBC) shares are on the move on Wednesday.
In morning trade, the banking giant's shares are up 0.3% to $26.33.
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Why are Westpac shares rising?
Investors have been buying Westpac shares today after the bank released an update on its technology simplification program.
That update revealed a number of initiatives that are underway that it believes will deliver growth and improve returns.
According to the release, the program's ultimate ambition is for Westpac "to be our customers' #1 bank and partner through life."
There are four pillars to its strategy. These are:
- Customer care at the heart
- Easy to do business with
- Expert solutions and tools
- Advocate for positive change
Management believes it is well-placed to accelerate its strategy now that its portfolio simplification is complete. This follows the divestment of a number of non-core businesses in recent years.
One of the keys to its technology simplification will be its Unite plan. This involves simplifying existing processes, reducing technology complexity, and decommissioning duplicated systems.
For example, it highlights that by consolidating its Australian collections platforms, it will go from 7 systems to just 1 system. It plans to start with Australian consumer finance and mortgages.
In addition, it will consolidate its Australian customer masters from 3 to 1. This will mean one common solution for all Australian customers. It will also be API enabled.
What will this all cost?
Westpac advised that its technology simplification will come at a significant cost.
The total investment spend is expected to be ~$1.8 billion in FY 2024 and then ~$2 billion annually from FY 2025 to FY 2028. That's a total spend of ~$9.8 billion.
But it believes it will be well worth the investment. The bank highlights that the Unite plan will help close the cost to income ratio gap to peers. It also expects run cost efficiency benefits and a reduction in the cost of change.
