CUA eyes off mobile payments, but not NFC

While Credit Union Australia (CUA) might be a late comer to mobile banking apps, it is firmly setting its sights on mobile banking, with its CIO stating it would be “illogical” not to give customers what they want.

CUA’s chief information officer (CIO), David Gee, told CIO Australia that the financial services company is currently exploring its options and looking at how to deliver mobile products such as peer-to-peer payments.

“The people we are trying to attract will be more tech savvy, educated and prefer to use the internet and use mobile channels and the like. So for us not to be doing stuff in that [mobile] payment space would not make sense, because that’s what the customers want,” Gee said.

“We’ve been in a workshop recently with some other organisations looking at what [peer-to-peer payments] means? There are many interpretations of what a mobile payment app looks like.”

St George recently released a pay-to-mobile app which utilises near field communication (NFC), which allows smartphones to communicate with each other. The Commonwealth Bank was also the first bank to release an app with NFC with its Kaching app released in December last year.

However, Gee said NFC is not yet developed enough for it to be used by a large section of the population.

“To me that’s 2014 and beyond when the chips are built into the phones … When the security around that is really good, then people will use that all the time,” he said.

CUA core system overhaul

CUA is currently part-way through a core systems overhaul which it announced in early 2011, encompassing three channels – core banking (90 per cent of the system changes), its internet platform and its mobile platform for smartphones.

The overhaul is attempting to combine 10 years’ worth of changes in a couple of years. “A lot of things weren’t being done and now we’re saying let’s do it all and let’s do it all quickly,” he said.

As part of its digital orbit overhaul, CUA recently released its first mobile banking app, which was late to the market, with the Commonwealth Bank announcing a mobile banking app in March 2009.

“Part of that has been to examine how best to move ahead. One of our recent meetings have been with a number of other financial institutions and we are exploring what synergies we have to work together. It is early days in those discussions,” Gee said.

While financial institutions like the Commonwealth Bank have much larger budgets when it comes to technology, with CommBank spending $1 billion on a managed service contract in April 2009, Gee said CUA has to use its budget wisely.

“We spend nothing like that … so we can’t compete [with them] in dollars because they’re just much bigger than we are,” he said.

This meant ensuring it had the right personnel working on the company’s system overhaul and partnering with the right product to help carry it out.

Gee, who has 28 years experience in IT but is relatively new to CUA with only nine months under his belt, had previously worked with SAP and Oracle to carry out systems overhauls. However, he said their more commercial focus versus TCS BaNCS cultural fit made TCS BaNCS more suitable.

“Given my past history, I said ‘I know how these guys operate [more on a quarter-by-quarter basis]’. I’m actually quite happy that we’ve chosen a product like TCS BaNCS,” he said.

As part of the overhaul, changes include a move to a new data centre with a new IBM mainframe, a new network firewall and new storage. CUA is also working with Cuscal to migrate its payment switch from FDI and will introduce Citrix Terminals into its branches to replace PCs.

While Gee would not reveal a specific end date for the overhaul, he stated it would be completed within a year, with functional testing already started.

Eventually, Gee envisions a future where smartphones are used as a wallet which would allow users to pay for products and services with their phone in the same way they would use a credit card. Countries like Japan and Hong Kong are already doing this, Gee said.

However, he said the security of smartphones still needs improving if they are to eventually be used as a secondary wallet. As a consumer himself, Gee said he would be unwilling to upload credit card details onto his phone unless he had biometric access control.

“Then I’d feel comfortable to allow all that information on there,” he said.

“In Korea they have been testing NFC on cell phones with up to six credit cards and 20 loyalty cards. In my opinion, for people in Australia to take up this notion [it] will require biometric access control. Without this I personally would believe that most consumers will be cautious.”

Follow Stephanie McDonald on Twitter: @stephmcdonald0

Follow Computerworld Australia on Twitter: @ComputerworldAU

Take part in the Computerworld conversation: LinkedIn: Computerworld Australia