CBA boosts tech spending to fend off fintech rivals

The Commonwealth Bank has flagged a lift in its technology spending, as the banking giant faces a wave of competition from fintech rivals and looks to cement its key position in customers’ financial lives.

Chief executive Matt Comyn on Thursday indicated the bank’s technology spending was ramping up, such that a 2019 commitment to spend more than $5 billion over five years would increase to more than $6 billion.

Commonwealth Bank chief Matt Comyn.Credit:Louie Douvis

“I think you can probably reasonably conclude from the conversation today that we’ve got a bold ambition in this space, and it’s going to require investment,” Mr Comyn said at CBA’s tech hub in South Eveleigh, Sydney.

“We think we come with some very strong capabilities, but there’s a lot happening in the broader context both domestically and internationally, and we certainly intend to increase our investment in technology and digital particularly,” he said.

Mr Comyn told the media briefing the pandemic had sped up a move among customers towards digital banking, and CBA would be accelerating its digital strategy, part of which is a long-term partnership with Afterpay rival Klarna.

He flagged the investment boost as the bank — seen as the tech leader among the big four — said its ambition was to provide customers with digital experiences close to world-leading companies.

Mr Comyn made the comments following a presentation on technology that also included its executive general manager of everyday banking Kate Crous, managing director of X15 Ventures Toby Norton-Smith, and the local head of Klarna, Francine Ereira.

CBA said Klarna, a buy now, later (BNPL) business in partnership with the bank, had reached 575,000 customers and it had signed up 400 retailers including fashion groups Country Road, Hanes Group and General Pants Co. There have long been predictions BNPL businesses will be regulated, and Mr Comyn repeated his view that he thought these firms were providing credit, and regulation was “inevitable but not imminent”.

CBA is a shareholder in Klarna, and after the recent surge in BNPL shares including Afterpay and US-listed Affirm, Mr Comyn estimated Klarna could be worth about $40 billion.

Mr Comyn indicated that irrespective of CBA’s stake or any float of Klarna, the bank viewed it as a long-term partnership. “We certainly see the partnership as very long term, we’ve got a joint venture here in Australia and New Zealand,” he said.

Evans and Partners banking analyst Matthew Wilson said CBA’s presentation was slick, aimed at the media, and part of its attempt to lobby for regulation of BNPL businesses. “With sneakers and t-shirts CBA presented with flair, confidence and IT shtick,” Mr Wilson wrote in a note to clients.

At the briefing, Mr Comyn and the other executives talked up the importance of using customer data to offer personalised offers and service, as its venture capital arm X15 said it would buy Doshii, an app for hospitality businesses facing a surge in online deliveries. Mr Comyn said the investment was an example of how CBA wanted to scale up fintech ideas with its customers, pointing to the big changes in hospitality caused by COVID-19.

“If you look at food services generally, both domestically and internationally, it’s a really good example of a business that was fundamentally changed during the course of 2020,” Mr Comyn said.

The briefing revealed a 10 per cent increase in CBA’s active digital customers over the past two years to 7.5 million, as the pandemic drove more customers towards banking. “COVID was really an accelerant of some of the structural shifts that were really already underway,” he said.

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