Wellington-based Kiwi Group Holdings has announced that Kiwibank’s high-profile core banking system project, CoreMod, based on the SAP for Banking solution suite, is under strategic review.
The announcement accompanied the release of Group financial results for the year ended 30 June 2017, in which a $90 million impairment relating to the project contributed to the bank’s decreased net profit of NZ$53 million, compared to NZ$124 million a year earlier.
“We need to ensure that our broader IT infrastructure (not just the core system) doesn’t limit delivery of our long term strategy,” said Paul Brock, chief executive, Kiwi Group Holdings.
Although four years ago when the project was first undertaken Kiwibank had thought its silver bullet for a digital future was the CoreMod back-end and infrastructure transformation, changes in the industry now point to a need for fast and extensive changes at the front end as well.
“The way customers interact with Kiwibank is changing almost as rapidly as the technology required to support their increasing preference for digital banking experiences,” said Brock.
“In the past year over 40 per cent of sales, for example, were completed through a digital channel. More than 57 per cent of customers digitally connect with Kiwibank, collectively over 27 million times each month,” he said.
The review will examine a number of options for how Kiwibank can best deliver a digital future in the context of the fast-paced changes occurring in the banking industry. While the review is being completed, it was decided to impair the value of the project’s work in progress.
Brock noted that the assets associated with the successful migration of the bank’s batch payments to an SAP solution remain unaffected.