National Australia Bank declared 1H20 results revealing a 3.4% decline in revenue and a near 25% decline in cash earnings. The results were impacted by credit impairment charges of A$1.16bn.
Announcing the results, CEO Ross McEwan acknowledged the impact of COVID-19 on the bank’s financials and the “rapid and unprecedented upheaval” caused by the pandemic.
In a significant announcement, the new-ish CEO stated there would be “Greater focus on digital and delivery by elevating UBank and Strategy & Innovation”. This is backed by the new organisational structure with five end-to-end banking businesses “designed around customers“: Personal, Business & Private, Corporate & Institutional, Bank of New Zealand and UBank.
Acknowledging the work done by his predecessors and the leadership team, the banking industry veteran said: “Work over the recent years has made inroads into removing complexity, uplifting digital capability and establishing strong foundations in technology.”
We are continuing to migrate IT applications to lower cost cloud platforms
Ross McEwan
Technology highlights
- Cloud-first agenda to continue. NAB revealed “33%” of IT applications are migrated to the cloud
- Near 10% reduction in IT legacy applications since FY17
- Insourcing to continue at a faster pace than outsourcing
- Preparing for future opportunities with solid technology foundations
- Data foundations built enabling advanced analytics and machine learning
Improvement Areas
The big bank also acknowledged areas for improvement. “We have a medium-term focus on standardising and simplifying our architecture to reduce the number of core systems and provide more consistent outcomes for customers and colleagues”, said Mr McEwan.
Easy customer experience. Move away from the current state of inconsistent experiences from bankers and channels. The neobank ambitions of Bank of Queensland is an indicator of the imperative for traditional banks.
Radically simpler with digital-first propositions. Simplification and ease of doing business are areas of focus for other leading enterprises as well. Telstra has its T22 strategy in progress while CBA has a similar target to go 95% on the cloud while reducing the footprint of legacy apps.
The Net Promoter Score (NPS) is still negative for NAB. The strategic NPS for March 2020 was at -18 despite being up 3 points. In comparison, neobank 86 400 claims an NPS of 46.
More to come: Deep dive of NAB 1H20 Results and Digital Strategy Focus
