Westpac (ASX:WBC) has pointed to software maintenance and licence costs increases after seeing its annual tech expenses rise by $171 million, reporting technology-related expenses of $1.9 billion for the financial year ending September, 2016.
The bank told shareholders in its latest financial results that much of the ten per cent year-on-year increase it experienced in technology expenses was attributed to an increase in investment spending, technology services expenses, and software costs.
According to the company’s latest Australian Securities Exchange (ASX) filings, software maintenance and licence costs alone counted for a $56 million increase in tech spend, thanks to volume increases and investment-related licences.
This increase was related to the delivery of the company’s Westpac Live and BT Panorama platforms, as well as other digital innovations it undertook during the year.
Across the board, Westpac tallied up $277 million of expenses for software maintenance and licences, $672 million in technology services, $181 million in telecommunications costs, with $72 million attributed to data processing.
The bank also spent an additional $171 million to strengthen its cyber security capabilities during the year.
Much of the company’s spend on digital technology during the year has been used to increase its ability to improve customer experience while simultaneously improving productivity and risk management.
The digital developments Westpac has invested in during the year include building up its front-end technology by introducing a range of customer enhancements to automate sales and services, including a dedicated program to reduce manual processes in branches and call centres.
The company also launched a new online banking system for St. George business customers – modelled on Westpac Live, expanded the functionality of its online lending platform for small businesses, and began development of its Customer Service Hub.
According to Westpac, the Customer Service Hub stands at the centre of its technology strategy aimed at accelerating and simplifying systems and processes with a focus on customers.
As one fo Australia’s ‘big four’ banks, Westpac is known as one of the biggest spenders on IT products and services in the local financial services landscape.
By comparison, Commonwealth Bank of Australia (CBA) spent just under $1.5 billion in information and technology services for the year ending June 2016.
Meanwhile, on 3 November, ANZ reported $2.15 billion in technology expenses for the year ending September 2016 – a 47 per cent increase on its costs for the same period the previous year.
ANZ's tech spend surge comes as the company appoints Dimension Data veteran, Gerard Florian, as its new group executive of technology, a role that will see the former chief strategy officer build out the bank's technology strategy.