Commonwealth Bank of Australia (CBA) chief financial officer Alan Docherty has confirmed the company will continue to insource its technology capability for “at least for the next year or two”, as the bank moves to further reduce its reliance on external vendors.
According to its full-year report released today, CBA saw a five per cent increase in its full-time employee (FTE) numbers, from 46,997 to 49,122, with the bank allocating additional resources to its in-house IT and engineering teams to support its anti-fraud and cybersecurity uplift programs, alongside frontline lending operations.
“We’re going to continue with the insourcing work that we’re doing,” Docherty said during the CEO and CFO’s presentation to shareholders today.
“We’ve seen a commensurate reduction in the external providers that the technology team used historically, commensurate with the increase in technology FTE that we’ve brought in-house.
“There’s further work to do there, so I think that will continue.”
With the insourcing drive (and increases in wage inflation), CBA’s staff expenses increased by $595 million, or nine per cent, year-on-year to reach $7,177 million.
Docherty added that higher staffing costs have been, in part, offset by a commensurate reduction in the costs of external technology service providers or vendors.
CBA, as part of its annual report, said its priorities are to reduce its reliance on external vendors, effectively: bringing more functions in-house; delivering cost savings while enhancing quality by building world-class engineering capabilities; and delivering ongoing modernisation and simplification of its technology stack to accelerate its migration to cloud, in turn, reducing the cost of IT ownership and risk, and improving delivery agility.
The bank notes it has a “complex and diverse supply chain” composed of more than 4,300 suppliers.
CBA’s IT costs also grew by a relatively modest $66 million, or three per cent, to reach $2,036 million, primarily due to inflation and increased software licensing and infrastructure costs, including growth in cloud computing volumes. However, CBA noted, this expense was partly offset by productivity initiatives including a reduction in third-party service providers and contractors.
The bank, Australia’s biggest, reported another bumper profit for the FY2022-23 financial year, with a cash net profit of nearly $10.2 billion.
This was driven in large part by a 17-basis point increase in the group’s net interest margin – that is, the difference between the amount earnt through interest on loans against the amount paid to customers in interest on deposits.
Net interest income grew to $23.1 billion, up 18 per cent on the $19.5 billion reached in FY22.
CommBank app draws record numbers
CBA recorded an 11.5 per cent jump in the number of active customers on its CommBank app, peaking at 7.8 million in June 2023 – the most used financial services app in Australia, according to CBA chief executive Matt Comyn.
On average, Comyn said, customers are now logging in to the app on average 39 times per month.
CBA now counts over 8.7 million digitally active customers as at the end of June this year.
Digital transactions also now account, by value, for 75 per cent of all transactions made by CBA customers, with $78.6 billion transacted through the CommBank app in the year to June 2023.
Monthly logins to the CommBank app also grew by 7 per cent, reaching 39.1 million active customers this year.
The bank in May this year unveiled a major update to its mobile app (now in iteration 5.0), rolling out a host of new features, including a credit score check service, ‘Name Check’ (which notifies customers of a potential mismatch in account names when transferring funds) and ‘Caller Check’ (which customers can use to verify that a call from a CBA representative is genuine).
With the upgrade, the company said, feature and product discovery by customers within the app’s library has grown by 40 per cent since pre-launch.
Comyn said that more than 3.2 million customers have engaged with the bank’s digital tools, such as Bill Sense, Money Plan and Spend Tracker.
“App 5.0 builds on a strong, multi-year history of leadership in digital banking. Every year, we have more digitally active customers who log in more frequently each month and who are more engaged when they are logged in,” Comyn said.
He added: “Following the launch of a number of digital protection features this year, we’ve been able to prevent or recover more than $200 million from scams targeted at our customers.
“One of these is Caller Check, which we use about 50,000 times per month.”
“NameCheck has helped one of our customers avoid a $1.2 million mistaken payment and on 16 million occasions has provided customers with reassurance their money is going to the right place.”