The next challenge for the Australian banking sector is a resource one, according to Westpac CIO, Dave Curran. He argues the biggest roadblock for banks, as they shift to digital models, is finding the employees to do it.

“Technology is the opportunity and the challenge of our generation,” Curran said in an on stage discussion with Oracle CIO and SVP, Mark Sunday, at Oracle Cloud World in Sydney.

“I think the biggest challenge of the next five years is not how we leverage cloud, we have companies like [Oracle] to do that, it is not about how we leverage data… It’s actually how do we build the skillsets in our teams when we can’t just go to market to get them?”

According to the Westpac CIO, the need for new digital skills is being driven by digital technology and bankings “biggest challenge” – the shift from the provision of products to services.

“Banks grew up selling products and then opening channels… Banks no longer sell products, banks provide services,” Curran said.

It means banks have to transform their “entire architecture” from one based on product and channel to one based on service provision, Curran said.

The shift to services is ‘really hard’ to see

Many in the banking sector still struggled to recognise the shift to services, something the ongoing Financial Services Royal Commission had demonstrated, Curran said.

“Seeing that shift is hard. It’s really hard,” Curran said in reference to the royal commission.

“And how you manage that in large organisations can be done a lot better. I think trust in large organisations –  be they corporates, be they large banks, be they governments – is something that we are challenged with in the 21st century and technology is both providing that challenge and offering solutions to that challenge.”

The banking royal commission has so far uncovered several incidents of financial institutions charging customers fees for services which were never provided, including an incident where a Commonwealth Bank advisor knowingly charged a dead client for a decade.

Curran did not comment on specific findings from the Commission but said revelations were “symptomatic of the challenges we see”. He also advocated for more transparency in the banking sector.

‘Most industries are now services’

According to Curran, banks aren’t alone in this shift as “most industries” have now moved to service provision. The challenge now, Curran says, is changing the banking architecture to one more suited for services.

Westpac CIO, Dave Curran

Curran illustrated his point by suggesting banks now require significantly less infrastructure, like data centres, and can instead rely on Infrastructure as a Service (IaaS).

“We need to leverage what’s out there and leverage the capabilities of others. So IaaS and PaaS becomes really important.”

While front end changes are relatively easy, major organisational change is complicated by legacy systems and strict security requirements, Curran said.

“Technology would be really easy in the 21st century if it wasn’t for cybersecurity.”

Cybersecurity is one of Currans chief concerns around Australia’s shift to open banking. He said while Westpac supports the open banking principle as a way to grow the industry and economy, it was important to “be careful around the cyber environment”.

“If you lose that [consumer trust]. Getting it back is really difficult.”

Fintech frenemies

Becoming more agile, Curran says, allows banks to better service customers – a long held advantage of smaller, more agile fintechs. But banks have responded to the financial services insurgents, according to Curran, who said it was just four years ago when the fintechs were expected to “eat the banks’s lunch”.

“I think now fintech and the banks are sitting down and doing lunch together, which is an interesting conversation.”

“The banks know they need to work with the fintechs because that’s how we provide better service to our customers. Some of the fintechs want to work with banks because we have that base core logic and data that’s so important for how we run financial services.”

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