Mahesh Sharma | August 19, 2008
NATIONAL Australia Bank has given a crucial component of its legacy systems overhaul to Indian banking software developer i-flex, which may result in some of the bank's staff being left out of the early stages of the project.
NAB's new Star Bank project does not have physical branches and offers banking services through call centres and the internet.
It will be developed using i-flex banking software technology. Oracle is majority owner of i-flex solution, and it recently rebranded the business, Oracle Financial Services.
The Indian banking software company will be involved in designing the platform that will replace NAB's core banking systems and will plan the replacement process. I-flex will deliver a range of services, including support activities such as professional and application management, analytics and consulting, according to its local office.
Typically, i-flex uses both onshore and offshore resources to complete a project, but it is uncertain how this would break down for the NAB project.
Indian newspaper The Economic Times reported the deal was worth $US90 million.
Oracle staff were on-site at NAB last week sizing up the technology landscape, and the bank's employees have expressed concern over their future after comments from the management that they would not be involved in the first phase.
NAB spokeswoman Kerrina Lawrence said the development work would be split between its staff and Oracle, but the final make-up had not been decided.
At this stage there were no plans to host Star Bank offshore, she said.
"NAB has not decided against using its staff in the process. It is anticipated that NAB will use a mix of internal and external skills," Ms Lawrence said.
The bank moved a step closer to identifying that balance yesterday, as it combined two of its biggest technology teams, enterprise services technology and technology banking Australia, to improve the bank's capability to service the next-generation platform.
The plans are detailed in an internal memo obtained by The Australian.
"It recognises that we'll be rebalancing our investment between business as usual and NexGen and must therefore consolidate our capabilities to free up capacity to focus on the significant transition activity ahead," NAB chief information officer Michelle Tredenick writes.
The combined division has about 1300 staff, half of NAB's IT workforce, with leadership teams reporting to technology banking managing director Craig Bright. Former enterprise services technology head Stephen Phillips has been appointed as technology lead for Star Bank.
The restructure will be bedded down over the next two months, under the watch of an integration manager and Mr Bright, and Ms Tredenick said more structural changes could be rolled out to other business units.
"We'll continue to progressively evolve our model over time as we further progress our transformation agendas."
NAB has embarked on an offshoring program over the past couple of years. It started with back office and finance and credit card processing functions, but gathered pace this year with the IT outsourcing program.
The first wave of IT outsourcing affected jobs in several legacy banking system areas.
As well, some payments and enterprise resource planning functions were sent offshore to Indian outsourcers Satyam and Infosys.
NAB is in the final stages of reviewing outsourcing wave two, which could lead to up to 400 jobs in technology banking and the MLC wealth management business going offshore.
Planning is believed to have begun on outsourcing wave three.
Several sources have said any legacy replacement work that is not done by Oracle will be sent offshore to Infosys and Satyam.
Ms Tredenick told staff the offshore trend would continue in line with its technology transformation program, code-named NEOS.
She also said it would use offshore resources to do some of the work for the core banking project.
"NAB has always used hosting and still uses a combination of hosting, having some of our internal people host the platforms and develop the platforms, and working with external suppliers," Ms Tredenick said. "We've done that for the past 10 to 15 years and will continue to do that."
However, she also expected the next-generation project to create more local jobs as the scale and intensity of work increased over five years.
Technology banking general manager Craig Bright said recently that technology staff numbers could fall to less than 1000 over the next five years.
The figure was noted by several NAB employees during an exchange in an informal question and answer session at a technology team event.