NAB aims to shift more than a third of its applications to cloud

Seventy applications migrated so far

“The cloud has become a major opportunity to drive lower cost, lower risk and faster speed,” NAB CEO Andrew Thorburn today told a briefing on the bank’s full year results.

During the 12 months to 30 September the bank cut IT applications by 5 per cent, and 3 per cent of applications were migrated to cloud services. Some 70 applications were shifted to the cloud during the year, including 30 applications over a 50 day period in the second half.

Shifting an application to the cloud can reduce costs by up to 60 per cent, NAB said.

“We have some excellent partners in this area and whilst we’re undertaking ongoing evaluation we’re making good progress,” Thorburn said.

“We’ve now moved 70 applications to the cloud, reduced other applications by 120 and over the long term we see the potential to have a 15-20 per cent reduction in IT applications and 35 per cent of all IT applications hosted in the cloud.”

The bank says it now has the largest Australian population of cloud practitioners and certified cloud engineers in a single organisation.

In April the bank launched a training initiative dubbed ‘NAB Cloud Guild’ with an initial focus on Amazon Web Services. The program, which has had more than 3000 NAB employees participate, has since expanded to encompass Microsoft’s Azure cloud platform.

NAB is moving some of its core platforms, including SAP, to Azure, according to Microsoft.

In November 2017 the bank revealed that some 6000 positions would be slashed over three year, with the bank planning to simplify its structure, invest in more automation and increasingly focus on digital channels. Thorburn said that NAB would, over the same period, create around 2000 new full-time positions will be created in areas including data science, AI, robotics, automation, and digital.

Later that month the bank began its push to recruit new technology specialists as part of an emphasis on reducing outsourcing in favour of boosting internal IT capabilities.

“We’re not just investing in technology but in people and capability so that we can have a sustained impact,” the CEO said today.

He said had that NAB had assembled a “world class” technology team, recruiting from major tech companies and international banks — “people who have deep domain expertise and know what needs to be done in areas like cloud and data and architecture and infrastructure.”

NAB’s technology leadership team features 10 new executives that have experience at companies such as Microsoft, Amazon, Walmart Labs, HSBC and Scotiabank, the bank said.

“The insourcing of capability, whilst it adds staff numbers, also increases our responsiveness and reduces risk, and is also more cost efficient,” Thorburn said.

During the year the bank insourced 542 roles, mainly related to technology and operations.

The bank’s investment spend grew more than 25 per cent to $1.6 billion. NAB’s investment in infrastructure projects grew by 21 per cent to $542 million.

“The increase is largely driven by ongoing simplification and technology refresh activity, spend on enhanced cyber security capability, strategic customer relationship management and cloud based infrastructure,” the bank said. The increase was partially offset by reduced spending in relation to the New Payments Platform, which launched earlier this year.

The bank also revealed that its investment in customer experience, efficiency and sustainable revenue projects increased by $107 million (25.8 per cent) to $521 million.

The bank reported cash earnings of $5.7 billion for the year.

“Our FY18 result was impacted by restructuring-related costs and customer-related remediation, with cash earnings 14 per cent lower than FY17,” Thorburn said in a statement.

“Excluding these items, cash earnings declined 2 per cent due to higher investment spend as we accelerate investment to transform our business. Pleasingly, revenue was higher with good lending growth and stable margins.”

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