The core banking transformation project at National Australia Bank (NAB) is costing more and taking longer than anticipated. The launch of the new system, Flexcube from Oracle FSS, has been postponed until next year.

National Australia Bank’s core systems overhaul is experiencing delays. The five-year project began in summer 2008, with Oracle FSS’s Flexcube at the heart of core software transformation. The ‘foundation release’ of the ‘Next Generation Platform’ was set for 2011, but NAB’s most recent annual financial results state that this task is now a priority for 2012.

The stand-out figure in the results is a 56 per cent increase in the investment in NAB’s infrastructure projects since September 2010. The bank spent AU$719 million (AU$1 is about US$1) in the course of the last year (ended 30th September 2011), an AU$258 million hike compared to the previous year (this increase was larger than the annual IT spend in 2009, when the figure stood at AU$249 million). Most of this money went towards ‘the group’s Next Generation banking IT platform and convergence of key technology and operational infrastructure’.

National Australia Bank, Melbourne HQ. Image: Anthony Agius.NAB also claimed it has reached some milestones in the project. Network modernisation has been completed at all sites, its securitisation platform now has additional capabilities and customer-facing systems availability has increased.

In addition to deploying the foundation release of Flexcube, NAB has also outlined other major objectives for the next financial year. These include the implementation of a new credit risk engine, funds transfer pricing capability and a CRM overhaul.

As part of the bank’s overall IT modernisation, in 2008 the bank also contracted with a local treasury software vendor, CCK Financial Solutions, for its Guava Suite (IBS, September 2008, Who’s bought what?). In 2009, a deal with SAP was signed, to cover procurement and HR systems (to be rolled out worldwide), and to create a single ledger for the bank’s activity in Australia and New Zealand.

A number of recent Flexcube projects have not gone according to plan. Allied Irish Banks (AIB) took Oracle FSS to court in early 2011 in an attempt to recoup €84 million from the vendor for a failed implementation of Flexcube for retail banking (IBS, February 2011, AIB takes Oracle FSS to court). And in Norway, EDB is seeking €3.24 million from the vendor following a terminated partnership between the two companies, after EDB selected Flexcube in 2005 to use it as the basis for its service bureau. The dispute has not resulted in a lawsuit so far but it is clear that this is one possible outcome (IBS, October 2011, EDB seeks NOK 25 million from Oracle).

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