CBA doubles down on digital, accelerates technology investment to record levels

CEO Matt Comyn is ramping up the bank’s technology investment, given his staunch view of the role AI, digital infrastructure and tech execution will play over the next decade.

CBA’s results showed investment spend climbed to almost $1.1bn in the six months ended December 31, up from $988m in the same period a year earlier. Picture: AAP

Commonwealth Bank chief executive Matt Comyn is ramping up the lender’s technology investment to record levels, given his staunch view of the role artificial intelligence, digital infrastructure and tech execution will play over the next decade.

After CBA delivered a better-than-expected interim profit result on Wednesday, Mr Comyn noted the bank was doubling down on technology deployment and functionality to stay ahead of his major domestic rivals.

“The rate of innovation at a global level in this area is only going to accelerate,” he told analysts and investors.

“We increasingly believe that the long term strategic positioning and performance of CBA will increasingly be determined by our relative technology execution and therefore we want to keep the investment high.

“Through technology and digital we deliver superior customer experiences. We’ve increased investment in technology to record levels during the half, this includes Australia’s first GenAI (generative AI) powered messaging service for bank customers.”

CBA’s investment spend across its strategy and growth priorities has progressively increased in the past five years as the economy has emerged from the depths of Covid-19, and bank’s focus switched away from remedying and fixing systems issues identified during the Hayne royal commission.

CBA’s results showed investment spend climbed to almost $1.1bn in the six months ended December 31, up from $988m in the same period a year earlier.

When that latest figure is annualised it equates to $2.2bn in spend for the fiscal year, a notable 10 per cent increase on the prior annual period.

The uplift in spend by CBA comes as large global banks also ratchet up their technology investment. Last year, JPMorgan earmarked $US17bn for technology spend, a 10 per cent increase on 2023.

Commonwealth Bank CFO Alan Docherty, left, and CEO Matt Comyn. Picture: Nic Long for Commonwealth Bank

Bank of America spends about $US12bn annually on technology, of which $US3.8bn was directed to new technology initiatives in 2024.

While the overall increase in CBA’s costs and rising investment spend concerned some analysts against the backdrop of more muted domestic revenue growth, Mr Comyn said the bank was positioning for the longer term.

“We are also conscious it’s (tech spend) probably gone backwards in real terms (when accounting for inflation) over a few years, so we consciously wanted to increase that level of investment,” he added. “We can see some opportunities at this point to accelerate some progress, particularly on some of our longer-term objectives. We thought this was an appropriate time.”

Citigroup analyst Brendan Sproules highlighted, though, that CBA’s costs were ahead of expectations in the first-half results. “Inflation aside, technology investment continued and franchise investment spend,” he told clients ahead of a CBA analyst call.

“What we expect to be a key focus of the result call, is the outlook for costs … and accelerating investment spend. CBA’s cost profile is not dissimilar to peers that have higher profile tech programs.”

CBA’s operating expenses jumped 6 per cent in the six months ended December 31, buoyed by staff costs and inflation, compared to the same period a year earlier.

Macquarie Capital analysts said while CBA delivered a clean earnings result, it was clouded by higher expenses and a more challenging outlook as official interest rates started to be reduced.

“The earnings growth outlook over the next few years remains weak, and hence we cannot justify the multiple,” they said.

“CBA remains expensive, trading at a circa 45-90 per cent premium to major bank peers.”

MST Marquee analyst Brian Johnson questioned Mr Comyn about when CBA would start to see notable cost savings from AI, and whether the technology would soon start to replace workers throughout the economy feeding into higher unemployment.

Mr Comyn responded that while the exact timing of cost and other benefits from AI was uncertain, he suspected it would be “more gradual”.

Mr Comyn said CBA was seeking to improve customer experiences, automation and processes but also had to “govern and mange for the risks” that accompanied new technology.

Two of Australia’s biggest telcos and other companies, including CBA, this month joined the federal government by banning or snubbing China’s low-cost AI model DeepSeek. That came after intelligence agencies warned of an “unacceptable risk” to national security.

A survey by the Australian Securities & Investments Commission last year found that nearly half the companies polled did not have policies in place governing fairness or bias in their AI technologies. Even fewer disclosed the use of the programs to consumers. A Deloitte report, also released last year, identified a lack of consumer trust in organisations to use AI responsibly was prevalent across all 10 industries examined.

CBA’s finance chief Alan Docherty told analysts the increased annual technology spend would underpin a refresh of digital infrastructure and boost AI readiness across the bank’s systems and staff.

“We decided the time was right to again increase the level of investment of shareholder’s capital behind our strategy,” he said.

“We chose to reinvest some of that into our tech infrastructure and front line teams. We believe this is the right decision for the long term, extending our technology leadership and delivering better customer experiences and profitable franchise growth in the decade ahead.”

CBA has employed AI technologies to cut call centre wait times, while – in combination with other systems – AI has helped drive a marked reduction in scam losses.

Part of the bank’s strategy focuses on boosting engagement with its app and systems, so that customers are stickier and conduct more of their banking with CBA.

Originally published as CBA doubles down on digital, accelerates technology investment to record levels