Westpac Banking Corporation (WBC) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to Westpac's Technology Simplification update. I'm Justin McCarthy, General Manager of Investor Relations. Before we commence, I'd like to acknowledge the traditional custodians of the land in which we meet today. For us in Barangaroo, that's the Gadigal people of the Eora Nation. I'd like to pay my respects to elders past and present and extend that respect to all Aboriginal and Torres Strait Islander people. I'm pleased to be joined today by our CEO, Peter King; CIO, Scott Collary; and CFO, Michael Rowland. After the presentation, we'll move to Q&A. We'll take questions from the floor first and then online via Vevox for those online. Instructions how to use Vevox were included in the invite. With that, thank you, Peter.

Well, thank you, Justin, and good morning, everyone, and thanks for joining us at our full year results in November. We outlined our plans to simplify the technology stack across the bank. And today, we're sharing more detail on that program, which we've called UNITE. And this is about acceleration. UNITE is a business led technology-enabled simplification and the work is already underway. You have heard me say this before. Westpac's technology is an older or less capable than peers. We just have too much of it, and UNITE addresses this. UNITE is accelerating our simplification and it has 3 objectives: a better experience for customers, making systems simpler for our people and improving shareholder returns. In addition to these objectives, we also reduce risks as processes and systems are simplified. And UNITE is about working together across every part of the bank, to be simpler and deliver results enabled by technology. Most importantly, UNITE is business-led. And by this, I mean, it's a simplification program aimed at improving business and customer outcomes. It will be driven by the people closest to the customer. For example, our institutional payments team who know our customer needs best or our collections team who know the best way to help customers who are doing it tough. UNITE aligns with our strategy for growth and return. This program has the customer outcome front and center, in line with our purpose of creating better futures together. We've set an ambition to be our customers' #1 bank. And to that end, we need to be easier to deal with and that's what we're going after. We want to be #1 or #2 in our chosen markets and this program will help us achieve that. The second measure of success is return on tangible equity and the program is designed to improve this metric over the medium term. So why now? First, this is the logical next step as capacity frees up. We've simplified the business portfolio. We've made good progress on risk management transformation, but there is more to do in that area. And we're also building on upgraded technology foundations, which Scott will take you through in a little while. We're already using the business-led technology-enabled approach to drive customer outcomes. Examples include we now have the best banking app in Australia. We've turned the phone into a merchant terminal for small business, making their life easier. And yesterday, we launched Westpac SaferPay, which is protecting customers from scams and frauds. So we're proud of the progress, but we have to build on it. And as I said at the outset, UNITE has 3 objectives: improving the customer experience particularly the speed of our service. And for our bankers, faster speed means less time jumping between systems and more time with customers. And finally, shareholder return. UNITE reduced our complexity, meaning lower run and change costs. And to bring this to life, we estimate the implementation of open banking cost us over 30% more than necessary due to the additional systems that we have at the moment. And UNITE seeks to end this imbalance and narrow our cost-to-income ratio compared to peers. So in summary, now is the right time for us to embark on this journey. We're well underway, and we expect benefits to be delivered progressively out to 2028. So let me hand over to Scott, our CIO, who will take us through the program in more detail. Scott?

Good morning. UNITE is a key component of the Westpac's strategy. Through it, we will radically simplify and streamline technology to make it easier for customers and our people to do business. UNITE eliminates duplication, rationalizes processes and reduces operational risk and cost. The program is part of advancing our enterprise technology road map, which we introduced in 2021. This delivers the group's technology target architecture aligning to common platforms. Since then, we've made substantial progress to simplify Westpac and technology has played a significant part of that story. As we look forward, it's helpful to consider the results we've delivered with benefits on reducing run cost and delivering faster, less costly change. UNITE will build on the progress we've already made. It's about accelerating the level and pace of simplification through a program of coordinated initiatives across the group. UNITE will provide customers and staff with common platforms built around one best way to do things. That will greatly reduce costs and improve the pace of change. These common platforms make it easier for customers to bank with us and easier for bankers to serve our customers. The way I think about UNITE is within context of the group's broader tech strategy. The technology strategy is guided by 4 key principles you see at the top of the page. They enable our customer-centric build and they are built to change: Evergreen, Automated and Digital to the core. On Built to change, we want to take advantage of all the fast paced, rapidly changing advances in tech. So we're building a modular component-based architecture; in essence, modular banking, with components being easy to build, quick to change and providing some independence and functionality as opposed to a large-scale monolithic platform. In Evergreen, we mean build around the persistent teams, right? Keeping infrastructure platform's systems up to date through regular maintenance, utilizing cloud capabilities makes it easier, particularly built to take advantage of cloud infrastructure, software and platforms. This avoids cyclical investments in sweating assets until we're forced into a time-consuming and costly upgrade. Automated means automate everything reasonable, testing, change in production pipelines, controls, their keys to superior quality and risk management. They improve service and reduce cost and digital to the core. Customers expect an end-to-end digital transaction. Not starting in digital, moving to analog to complete the transaction. This dictates our build philosophy. Straight-through processing eliminates both time and errors. And as Peter said, we have the ambition to be our customers' #1 bank and partner through life. To achieve this, we need to be easy to do business with, and we need to create those world-class experiences, products and platforms. Westpac Live, the #1 banking app in Australia is best-in-class because we focused on design and features, and we've done this by increasing cadence in our delivery and using modular component architecture. Similar principles were used for digital mortgage. We build leading capability in engineering and infrastructure. We've centralized our data in the cloud. And starting in May, we'll move that production to the new Azure-based cloud platform for data, the latest in capability, scale, speed and reliability. In addition, we're well underway in developing our data products, giving business risk, finance and our development teams, real-time access to quality data for analysis, insights and applications. Using AI and data, we're making it easier. Our customer [ Cortex ] platform analyzes over 1 billion transactions a day. Using machine learning, we classify those transactions and help streamline the application process, making it easier for customers. On protecting customers, you've seen yesterday, we announced Westpac SaferPay, and I'll talk a little bit this in a minute. In terms of simplifying and modernizing, we continue to eliminate applications, reducing our footprint and installing leading-edge capability in our infrastructure development, security and systems. As Pete said, we've got more technology than we need. But when we benchmark our unit cost, it's within 5% of global best-in-class, and we think that's pretty good. We have achieved some consolidation already. We produced contact center platforms from 12 to 1, data centers from 4 to 2. We've automated hundreds of processes per year, saving both customers and our people, valuable time. In UNITE, we'll continue to simplify processes and consolidate 15 of our workflow systems down to our 3 target systems. We have one software-defined wide area network, creating twice the bandwidth at half the cost. This cuts 9 networks to one and was recognized locally, regionally and globally for awards and project and network management. We have cloud capability in AWS and Azure and have modernized our midrange compute platform, saving $30 million a year roughly. Before I go on, I just want to take a moment to highlight Westpac SaferPay, which we announced yesterday. Westpac SaferPay is an Australian first. Using artificial intelligence, when our systems identify payment at high risk per scam, we'll ask the customer a series of questions to get more information. And if we think it's a scam, we'll stop the payment. This will help customers avoid scams, and the good news is we are seeing that scam losses come down. Year-on-year, our losses are reducing by 32%. We've implemented our group technology strategy through the enterprise technology road map. Our road map aligns the group's purpose and strategy with the underlying technology. From this plan, we've developed approximately 50 domain-specific road maps which cover each line of business, service and technology category. These domain road maps provide structure and focus as we simplify technology, creating world-class experiences, uplifting our infrastructure and engineering, federating data for use and insight and establishing AI capabilities. This slide highlights some of those key road maps, group by division. The 3-bard phases to the work: preparation, simplification and modernization and ultimately ending in target state. For example, in technology, we're already at target state on cloud platforms and services and software engineering, and we're almost there on the rest of the infrastructure. In institutional, we're underway with the simplification of our financial markets platforms and the consolidation of our legacy Asia technology. And in business banking, we're in the simplification process with a significant program of work to take us to one origination platform by 2028. Turning more specifically to UNITE. As you can see from the slide, a lot of work is already underway. UNITE is about accelerating the next phase as we pursue a more ambitious agenda and removing duplication across the entire stack, and that's what UNITE's all about. It's about accelerating the simplification, not from scratch. I've mentioned quite a few things that are done and near completion. But when we think about UNITE, we're taking maybe 180 discrete systems and flows down to about 60. In the different tech layers, we spent quite a bit of time on the foundation seen at the bottom. We're nearly a target state, and that's allowing us to develop and build faster through the rest of the application stack. In the middle layers, our products, platforms and enterprise, we made some good progress already. For example, we're down to 1 platform in HR and finance. But in UNITE, this is where a lot of the work will take place. We'll continue consolidating to a common workflow system, which I mentioned, and we'll automate hundreds of processes per year. We've made huge strides in data platforms and next up is reducing our customer masters from 3 to 1. And as our business continues to simplify products and services, we're adjusting our origination and onboarding systems to match. All this combined will help us deliver better customer and employee experience, which takes me to the top layer. We've advanced considerably in our component modular build which allowed us to create the #1 banking app in Australia. In Westpac Live, we've integrated FX capabilities and budgeting tools, making life easier for customers. And that's how we frame up our thinking on the overall program. But turning to some examples of UNITE in practice, drilling down on a couple. Currently, across our banker platforms, we have 6 banker platforms, which our people use to serve or provide new products in our brands across all of our brands. This is time consuming for our people and our customers. It makes it harder to train people across all the systems, and it means costs are higher. So how do we fix that? We'll be going to 1 platform each for sales and service, for customer management, for teller systems, all built on modular technology that's reusable across both employee and customer platforms, and that aligns to our built to change philosophy. The customer onboarding will reduce from 11 systems to 1 by the end of the program, creating easier verification for customers. Overall, it reduces paperwork, trips to the branch, delivering as faster, safer and more consistent digital experience while lowering our cost of both run and change. So this aligns with our principle for being digital to the core. And on collections, today, we have 7 systems segmenting customers and product. We've already begun moving to a more modern platform, improving efficiency, making customer experience so much better, faster and easier, and this will really help customers when they need it the most. We thought deeply about how we manage the risk of the program. It's not one big monolithic platform or build. We have roughly 85 initiatives that are sequenced for success. 11 have already started. 6 more will launch before the end of the year. We have good business ownership, accountability at each line of business and functional level, and as I have said, as we simplify the business, the technology will follow. Each of the 85 initiatives are aligned to the enterprise technology road map. Business owners will work with the technology lead to deliver each initiative. The program will be coordinated centrally and delivered by the teams with the most subject matter expertise throughout the bank. We have the momentum and the capability to deliver on this plan. And finally, the key UNITE initiatives starting in 2024. I'll single out a couple. At the top, you see we're underway with 22:1 customer verification process and our onboarding consolidation. And we're moving to a single customer file, migrating all customers to 1 common API accessible platform ultimately consolidating 3 solutions to 1. And finally, the consolidation of our collection platform, which I mentioned, has already begun with consumer finance and mortgage. Our commitment is to keep everyone up-to-date on progress. We'll leverage the success we've had in upgrading our platforms, decommissioning applications and modernizing our systems over the past couple of years. We'll apply the lessons from those successful outcomes across the 85 initiatives that make up UNITE. With the work already done and the refinements made, I've got great confidence in the way forward. And I want to thank you for your time and turn it over to Michael.

Thanks, Scott, and good morning, everyone. Today, I'll take you through our approach to balancing ongoing cost discipline with the additional investment required to make UNITE successful. There are 3 key points that I'd like you to take away today. One, Westpac has the capacity to undertake UNITE and to do it well. The changes will drive tangible benefits for customers, employees and shareholders. Two, UNITE is necessary to close the cost-to-income ratio gap to peers through lower run and change costs. And three, program investment will be incorporated within our total annual investment envelope and will be mostly expensed for accounting purposes. As you've heard from Scott, this year is about planning, and we have kicked off prioritized initiatives. Investment spend in 2024 is likely to be around the average of FY '19 to FY '23. Program delivery will ramp up in 2025. We expect the average annual investment spend to be approximately $2 billion between FY '25 and FY '28. This includes spend on growth and productivity and our regulatory and risk agenda. UNITE is focused on simplification, and we expect most of the investment will be expensed. Consequently, it's likely that our capitalized software balance will decrease over time. With the majority of the spend expensed and benefits mainly coming through in later years, this will be a headwind for expenses in the initial years of the program. We remain disciplined on cost and our cost reset program will continue to manage the impact on total expenses. Ultimately, UNITE seeks to reduce technology and business run costs and enterprise change costs. This will be the major driver of closing our cost-to-income ratio gap to peers over the period to 2028. We have outlined UNITE's '24 priorities previously. At each half and full year results, we will provide further details on outcomes so you can assess our progress along the way. As you have seen from our presentation today, we have a clear plan on UNITE, and we're excited about delivering it. With that, I'll hand off to Justin.

Thank you, Michael. So Peter and Scott. You're on your way up. Thank you very much. So move to Q&A. We'll start in the room. We've got a lot of you here, and then we've got a lot online is my understanding. So if we can limit to 1 question per person, maybe we make it easy. We'll start here and work our way down. John? If you could just state your name and organization when you get the microphone as well. Thank you. Sorry, Victor, I didn't see your hand up there, mate.

Jonathan Mott from Barrenjoey. If you look at IT programs over time, I can't think of 1 bank that's ever delivered on time and on budget anywhere in the world. It's just what happens. So given -- this is quite a big project, the amount of time it's going to take. So in the event that cost do come in higher than you think, is it more likely that each year, the spend is going to be higher. So we end up with a blowout in any 1 year, i.e., you have to hire more people to do the work. Or is it just that if it blows out, it's going to take longer to complete. So do you blow up or out? Which way is the more likely way that you're going to?

So we always think about the capacity for the organization to absorb change. So I think we talk financially a lot. You have $2 billion, which is a lot of money every year, but goes with that is the ability to execute. So UNITE is 30% of -- around 30% of the forward estimates, if you like. So it will actually depend on the change capacity organization. If we can change, we could go up. If we can't accelerate change capacity, then it will go longer. So I don't think -- I think that there's a cap on how much change you can put through in any particular year. So I don't think -- I'd say it's going to be one or the other. I think it's probably a combination.

Andrew Triggs from JPMorgan. So just on Slide 13 shows that relatively linear path of delivery of initiatives. Compared to most tech simplification plans, I would have thought that's -- it's typically a bit more back-ended. So first interested in the reasons why it's very linear? Then also, while you've been relatively silent on the benefits of this program, could we expect a similar delivery of cost benefits? Or will they be more back-end weighted, please?

I'll let Michael comment on the benefits. On the phasing, so we've done this as the UNITE program. We thought about the 85 initiatives and how we sequence it and then you've got us it within the overall program. So both of those views are driving the sequencing. But maybe, Scott, you can add a little bit of detail on what takes it a couple of years?

There is a lot of sequencing, a lot of interaction and connection between the systems. And so to derisk the program and to ensure that we have the right capacity, both subject matter experts in the business and tech, we have to pace that change. And so I always use the analogy. You can't have 7 dentists working on the same tooth, and that's kind of what goes into the sequencing activity here.

Yes. And then as we think about the benefits and the way that Scott's articulated the delivery over time, '24 is a bit of a ramp-up and Scott went through the 11 initiatives that have started already and the 6 that we are going to start in the second half. So the ramp-up is slow into '24 because it's mainly planning. Into '25, the program ramps up and into '26, and then we start to see the benefits. But that's in the context of our commitment to lowering our relative cost to income ratio gap to peers. So what we're balancing is delivery capacity, the cost of doing it and running our cost-to-income ratio down over time. So that means our cost reset program, which we've talked a lot about over the last 3 years remains in place to reduce that burn while we're waiting for those benefits to come in which are in later years.

Matthew Wilson, Jefferies. Transformational project, long awaited, well done. But obviously, there's flagged management change in the organization. How do you think about governance and ownership of such a project. We might get a new management team in 12 months' time. They may have a different view of this project than others. So how are you going to manage that project?

We thought about it deeply as a program. And as I said in my remarks, it's the right time now because I'm getting capacity. So that's the one now. In relation to the program, it's bought down. The Board knows and is committed to doing this program. We've been progressively thinking about this program for the last 12 months and its 85 initiatives led by general managers. So we often focus about the top of the company, but this has to be managed as 85 programs sequenced and delivered. And for the majority, we're simplifying the organization. So we've got the buy-in of not only the general management group, not only the executive and we'll have the Board governance as well. Just to give you a sense of how we govern this, we've got -- we've only -- we've got Scott, obviously, looking over the 85 programs. We've got our line group execs looking at each of the divisional impacts. We'll obviously have in our second line looking at the program as well, and Scott and I talk about this every day in terms of priorities. So to me, this is an organizational priority. It's a priority for me, CEO. It's a priority for the Board and the team and it's well thought through. So -- and to me, it's necessary.

Definitely necessary. 85 sort of general managers, is that a lot of orphans if it fails? It's not a typical project management we need to...

So these 85 initiatives and some -- there will be more than 1 initiative assigned or a general manager. So -- but I'm just giving you a sense of the accountability in the organization for the program.

I'll take Michael on the 2 question offer, and I'll ask Michael one of the questions. Scott, a question for you. If we look at the landscape of peers, everyone seems to be spending broadly a similar amount of money, around that $2 billion mark. You're now telling us that you can commit to this massive initiative around $3 billion. Where are the potential areas where you feel like you might be underinvesting relative to peers and how are you thinking about closing that gap? And the question for Michael. On your slide, I mean, one of the things that we've noticed over the years. Obviously, you've capitalized more than expensed and now you're looking to expense more starting from 2025. I think the market currently is looking for about sort of 2%-and-a-bit cost growth into 2025. How do you think we should think about that in the context of an additional spend? Is there big offsets coming elsewhere? Or is that something that the market has to kind of reassess?

Let me -- just on your first question. If -- I think we always think about TSP in the context of the whole envelope. So I'd say TSP is very much focused on the simplification of the business and technology. We know that's not sufficient. So we know we need to be competitive in other areas, particularly digital. And so that conscious on what we are thinking about outside of the TSP program. And you've seen some proof points recently and how we can do that in a smart way using the digital assets. So I'd just give you that framing and then TSP?

Sure, for UNITE -- the UNITE is simplifying in taking out duplication. We do have our best way of working our best technology stacks. So we're going to be consolidating too, and we'll be able to continue to advance some of those. We've got a lot of work going on, great work in Westpac One in our global treasury. We're adding more capability in our merchant acquiring. Westpac Live continues to update features and functionality. So there's not -- this isn't a stop everything and just migrate in. We're continuing to advance all across the board.

Sorry. So is the answer that you're going to become -- as a result of this program, you would be more efficient in the way you spend existing dollars relative to both the past and the peers?

Yes. Pete mentioned earlier that, for example, our open banking, complying with the open banking piece cost us about 30% more. And that's because we had to do it across multiple application. So as those things come down, every dollar spent will have a lot more efficiency in it. And we think that's a big part of why it's important to get UNITE done now.

Yes. And just to add to that, the way we think about it is, as Scott said, having a reduced number of systems means the cost of running our technology state is lower. The cost of -- the business cost is also lower because we haven't got our staff and our customers accessing multiple systems. And then the cost of change is lower. And the cost of change is a big driver of our cost over the last few years. And so that -- this is the really -- I can't overestimate how important this is to lower the overall cost base of the bank in the medium term, as Peter indicated, on those 3 elements. Did you want me to answer your question? Yes. So -- the way we think about the cost going forward is, as I indicated, this year, we're very conscious of the ramp-up. So it's a lower spend this year, but it will ramp up into '25 as I indicated. So there will -- that is a headwind on cost. I'll talk about the financials at the half year, which is coming up in May. But the way we think about that is the UNITE investment is an additional investment, and it will be mainly expensed, and we will continue to drive our cost reset program longer than '24 to deal to that, but I will talk more about it at the half year.

Rich Wiles, Morgan Stanley. Can I understand why you don't want to give specific cost targets or specific cost-to-income ratio targets. But you have very clearly said you want to close the gap. At the moment, that's about 4 percentage points to CBA and NAB who I think should probably be your benchmark given your similar business mix. Can you give us some idea of what's going to drive the closure of that gap? Do you think you'll do better than peers on revenue? Do you think you'll do better than peers on cost management? Is -- will it be skewed to one or the other. And are we sort of thinking it should be by 2028 given that's how long the project will be?

Yes. So again, I'll leave the detailed financial analysis to the half year. But what I did say is that we're targeting to reduce that gap by FY '28. So we see that this is lowering our costs over time. And we'll talk about our performance in the half on revenue, but we're pleased with the consistency of the performance we're achieving. So as I said, we'll talk about it more at the half, but hopefully gives you an indication.

Just to clarify. You just said reduce the gap? Previously, you've said close, close the gap. And you're not prepared to tell us whether it's predominantly revenue-driven or cost or should we assume it to be both?

So it will be both. To get there, Rich, it will have to be both.

Michael, you've mentioned a significant proportion of investment spend will be expensed which suggests there will be a capitalized component. So I mean, you're aiming to have -- ultimately have less than 60 systems that remain off the greater than 180. Those 60 that you will be left with, do they already exist? Or will some of them need to be constructed or will there be significant enhancements made to certain current systems that enable the capitalized component?

Yes. Scott could conclude about the detail. But the way we think about it and as we plan, we've been working through the plans. The majority of the spend is on going to one best way and that's not capitalized for accounting purposes. There will be some new builds, but that's the minority of the spend. I don't know if there's any...

Yes. The vast majority of the systems that will survive are already in place. They're either initial -- a couple of initiatives like the collection system, the new modern collection system that's underway. So that's already in process. But for the most part, this is about simplifying. So taking out the duplication that we already have and going to the 1 best process that's left.

Is it then fair to infer that 75% plus will be expensed?

Around that level.

Brian Johnson, may I ask a question? I'm not sure who can answer this. But if we have a look at Westpac and you actually crunch out the numbers, the external data would suggest that you're still discounting your price and your cost base is basically higher, which you've spoken to the costs. But if we actually have a look at the costs, it's the staff expenses. If you have to look at the staff expenses, it's the unit labor cost. Mike, is that a direct result of basically the IT, the multi-brand? And the flip side of that is, do the returns come from this from not needing to discount relative to the peers? So the staff costs and the discounted pricing on the revenue.

We'll show you some data at the half. But when we run our pricing against the RBA data, that's not right, Brian, but we'll show that to you. Michael, on the staff costs?

Yes. So staff cost is -- it has been part our cost reset agenda. And as I think we indicated at the full year last year, we reduced -- we've been reducing our staff significantly over time, and we will continue to focus on the head office cost component. We still got know what to do. We set our target of 20% by the end of '24. We're on track to do that. We'll talk more about what we've achieved there. And we've got some -- as I said, we're going to continue our cost reset program and there are other things that we'll do. But we're very focused on getting that overall cost base down. And to your second point, so UNITE is a big part of that reduction. When we talk about ongoing tech costs and ongoing business costs, the majority of that is people.

And Mike, the unit labor cost being actually significantly higher than the peers. What drives that?

That's not necessarily our analysis. I think there's a mix obviously. But again, we'll talk about that at the half, Brian.

It's just the staff cost divided by the staff number?

Yes. But there's a difference in -- and as I've indicated before, we have a different proportion in contractors' statement of work and FTE than our competitors. So when you look at it on an overall basis, it doesn't -- there isn't a skew, but I'm happy to take you through that.

Yes, John Storey from UBS. Just a follow-on question from what Matt was asking. Obviously, there's expected changes, potentially within the organization. I just wanted to get a better understanding of what responsibility around the transformation project actually sits with individual BUs at a divisional level in terms of being able to deliver the project?

Yes. Well, you've got the 85 initiatives and Scott's shown you the way we've constructed it. So broadly, it's functional, our technology team, our operations, customer service team and then the frontline teams. Each of those initiatives has a business [ RNF ], is the first thing. And then Scott and James Hutton -- James who led our portfolio simplification initiatives in specialized business, then wrap the whole program and look at sequencing and coordination and ensure we're on track to deliver. So it's at the individual level than at the JE level, and then I've got a portfolio management capability looking at the aggregate.

So the likes of Noel and Anthony and Jason, how involved do they get in that? And what's their level of accountability around...

They're all over us. Well, that's why they're here today.

That's what they are here today. But they're accountable for the divisions, and they've got both the resourcing to make the change. They've got the expectation on the customer outcomes, the financial outcomes and the risk outcomes.

We might move to some online questions, then we'll come back to the room for media and if we've got time any analyst questions. So we've got Carlos Cacho from Jarden. On Slide 10, you showed mortgage origination won't be fully rolled out until FY '25. How does this relate to the upgrade in mortgage processing in early 2023? What are the next steps here? And how will the new mortgage origination systems impact brokers and customers?

Yes. So when you think about the mortgage origination platform, you can look at some of the success we've had lately. So our time to write over the last several months has been right on target. We've reduced the variability associated with volume. Efficiency is about 30% higher through that process. NPS is growing, broker sentiment is growing and our banker sentiment is improving. So we feel really good about that. In terms of the flow, about 96% of the application flow is through that system. What this represents is that last 4%. So what I would typically call edge cases, but things we want to continue to provide to customers, and so we'll finish that out through -- now through 2025.

Like most people in the room, [indiscernible] a follow-up end. Westpac and St. George are still running on separate core banking systems. Do you have any intention to change this going forward?

So when I think about the core banking systems and frankly the whole entire tech stack, we do it in context of what we're trying to achieve with the program, better customer outcomes; better experience through that; simpler, easier to use for our bankers; improved NPS; reduced costs; reduced risk. So we look at in that entirety. Most of that -- those issues, those improvement opportunities are in the surrounds, not in the core. So over time, we've been modularizing a lot of the core. Little work actually gets done in the core banking systems themselves. So they are not a big kind of driver of some of those other issues at this point. They are part of the plan. But we're going to attack these in the kind of most logical order with them being lost.

So your next question comes from Brendan Sproules from Citi, relates to the enterprise tech road map. What's the most difficult, most costly and most complex of the capabilities that needs to be delivered?

Anyone you don't focus on well enough is going to be the one that causes you the most risk complexity. When you look at foundational pieces. So a lot of the work we've done already in infrastructure. So bringing 4 data centers to 2. There's a lot of risk and cost associated with that. 9 networks to 1, we did that over a span of a couple of years with only 1 incident across that whole time. So when you look, a lot of that foundational piece was really where a lot of the heavy lifting is. Customer data will be the next one that we have to really get right, getting all of the customer files into the one main group customer master and then starting to decommission the other two. So when I look at the plan, those are really big foundational pieces that have to go right in order for the rest of it to work.

That looks like it's it for online. Hayden, do we have some media questions at all. No? Then we'll come -- okay, we'll go to Matt who is representing what news organization you ever...

Matt Wilson, Jefferies. Just a further to Carlos' question, Scott, I didn't really understand your answer. Are there 2 calls or 1 call and you talk about digitizing to the core. Which core are you digitizing to? And secondly, to wait for the -- no, to avoid waiting for the microphone again. When you guys say they got the #1 banking app. CBA say they got #1 banking app. Macquarie say, they got the #1 banking app. And now Westpac say, they got the #1 banking app. Who really has the #1 banking app?

Well, I'll answer that one first. Based on the Forrester report is how we're looking at the #1 banking app?

Yes. In terms of the banking, I guess, the clear explanation, digital to the core means a consistent customer experience so that they're not going back and forth, analog to digital. Little c, not big c, right? We have more than 2 core banking platforms. Each product has a product processor. So I think when most people talk about core, they think about that transactional deposit system.

[indiscernible]. So which one survives ultimately?

Well, the funny thing about -- sorry, Celerity never got created. As a program, it stopped. So I think it's a good question. So our product processes are important. But where we want to go is to fourth-generation product processes. So in our suite -- in this plan at the moment, there's -- TenX is an example in institutional banking. That is fourth generation. We are moving to that. In retail banking, which has to offer our operator scale, there are certainly emerging options there, but we don't think we're ready at this point to make a call on where to go to. But we don't want to -- so I move trading bank to Hogan and then want to go to fourth generation. That doesn't make sense. So we want to go to fourth generation. It's not a call we can make today. But it's a call that we think we can make in the next couple of years. A lot of the simplification is preparing for that so that, that is a less risky, easier, faster process in the end.

Got a media question.

Andrew Cornell from Capital Brief. Following on from that, and there was a question over here. Can I just clarify, so you're not actually buying any new kit at this stage. It's all existing kit. And in terms of partnerships, whether it's Amazon Web Services or Azure, are you initiating any major new partnerships, offloading some of the tech operations?

So we will buy kit. But the point Scott was making was it's not like this program is heavily dependent on new kits. So TenX is an example where I'd say that is a new capability that we purchased. I'm not going to talk about other capabilities that we may purchase where we haven't done the deal yet, but there are options in -- but it's not the main part of the program. The main part program is consolidation of what we already have. So electronic identification is a good one. It was [ 11:1 ] in terms of the system. We have the 1. It's in place. It's a digital ID process. We've just got to do a migration from the other 10 onto the main one. Do you want to talk about partners?

We talked about in the presentation that this is going to be delivered by the teams with the most subject matter expertise. Those teams across the bank have existing partnerships. So they leverage those partners. Their partners are as excited as we are about helping us get through this process. We do have folks helping James, Accenture helping James in the overall program governance office. And as we continue to go through, we'll identify areas that we may need some supplemental resources. And we've got a great set of vendor partners that we can draw from.

John? Did we go to Mark there?

Jon Mott from Barrenjoey again. A question about the customer master files. It's all good to talk about the customer experience. But when you've got a customer who has multiple relationships with multiple brands and you don't even know it's the same person because they split across [ multiple ] things. How long is it going to take to merge, so you get to 1 single view of the customer? Because otherwise, a lot of this is sort of semantics, because from a customer's perspective, you're going to have multiple relationships and you won't even know it's the same person.

So I'll describe a little bit about the architecture we have. We have 3 customer masters in place. We have a group customer master, and we have 1 for Westpac and St. George. Those 2, Westpac -- those Westpac and St. George synchronized into the group customer master, and that's where we do customer consolidation today. But the underlying systems that use those, whether it's Westpac or St. George, still use the old legacy. What we're doing is getting to the point where all of that and those systems will be using the group customer master through an API-enabled format, and that allows us to take the 2 legacies out.

So how many duplicate customers have you got it, because there must be a lot of people who've got different -- owned different...

We already -- if you think about the financial clients scheme, you have to look at deposits across all brands. Just an example, where the group customer master does that heavy lifting for us, so there are multibank customers in there already and we deal with them on deposits.

You have already 1 view. So there's no one duplicated on both systems or there's likely to be...

We have 1 consolidation review, but then we have duplicates in Westpac and St. George. So it's not efficient.

Brian Johnson, MST. Just coming back to the customer master file because that seems to be the hardest thing to do. If you look at the history, no one seems to be able to actually do it. But I'm just intrigued if you follow the history of Westpac, Westpac is actually Westpac plus Challenge Bank. I can't recall ever hearing that there was an integration of those 2 customer data sets. St. George is actually St. George plus Advanced Bank plus Bank of Melbourne, plus BankSA plus RAMS. So when we actually think about this fact that there are 3 customer data sets, aren't they way, way more? Are they like 12? And if they're -- when you consolidate them, do people have to go and change a BSB and an account number to be the same?

On -- so you're testing my memory here, but I'm fairly sure that we retired Challenge and Bank of Melbourne brands when not too long after it was purchased. So I know there's not a challenge and a first version, a Bank of Melbourne brand, customer master anywhere. There's the group and the 2 that Scott referred to. So...

I may have referred to it as St. George, but it's the regional brand and the Westpac brand.

Regional brands.

And Scott, within those different customer data sets, the data has already been -- there's a commonality between it. There aren't gaps missing in the way, one bank collected it versus another. So like -- it's got full residential addresses and the data was consistent across all the various...

Yes. We've normalized the data across the group.

Andrew?

Andrew Triggs of JPMorgan again. Similar topic actually. I think with the ACCC yesterday mentioned some dissatisfaction with some of the quality of data sitting within the CDR regime. It would seem to me that Westpac is probably more at risk there given the multi-brands, but could you talk to the risk there? And if you're maybe an outlier potentially just given all on the quality of your data that goes into that regime?

I'm not aware of that. I know CDR is very detailed in what it asks for and it's probably more about the way that you capture the information versus the way you have to present it. But I'm not aware of any issues there. Do you think?

No, not anything.

We might leave the formal part of the presentation there. So for those online, thank you very much. For those in the room, we've got members of Scott's team and members of Pete's team, the 3 business line group executives. So if you have time, please go around and have a bite to eat. I think the sausage roles are ready, Michael.

Oh, fantastic. That's why I'm here.

Thank you, everyone.