Matt Comyn’s digital focus for CBA is internal as spend surges

CBA chief executive Matt Comyn says technology and digital services are an “absolutely critical” part of his bank’s growth strategy.

Commonwealth Bank CEO Matt Comyn is intensifying the bank’s focus on technology investment. Picture: Britta Campion

Commonwealth Bank chief executive Matt Comyn says he isn’t interested in buying a small digital banking player, because technology and digital services are an “absolutely critical” part of his own growth strategy.

Mr Comyn told The Australian that buying a digital banking player was not a strategic focus, and CBA was accelerating its own investment spend.

“At this stage we are very ­focused on continuing to improve our underlying technology. Acquiring a separate technology platform and then going through all of the integration would not be a priority from our perspective,” he said.

“We are, in this period, prepared to invest if we see opportunities to improve volumes and performance versus system.”

Mr Comyn’s comments come after National Australia Bank caused a stir with its agreed $220m acquisition of digital bank 86 400.

The competition regulator will closely scrutinise the transaction, amid some concerns about dominant and incumbent players taking out challengers.

CBA’s investment spend amounted to $856m in the six months ended December 31, from $639m in the same period in 2019. That means the annualised investment spend figure for fiscal 2021 would print at more than $1.7bn if maintained.

It spans technology, digital, pushing into the cloud and risk and compliance.

The bank’s chief financial officer, Alan Docherty, said the increased investment was “commensurate with the change program” CBA was pursuing.

In another area of the technology market, CBA did opt to take a small equity stake in Swedish payments company Klarna to give it exposure to the buy now pay later sector and a broader rollout in Australia and New Zealand.

Last month, Mr Comyn said that based on the valuations of other companies in the BNPL sector such as Afterpay and US player Affirm, Klarna’s valuation may sit at about $US40bn.

Authorities in the UK are poised to clamp down on the regulation of BNPL firms and how they assess customers’ ability to repay, and Singapore has also put the sector firmly on the regulatory radar.

“We continue to watch that (UK) market closely which we think is, of course, both relevant to customers but also potentially ­important strategically,” Mr Comyn said.

“We didn’t make the investment in Klarna per se for the equity return; we made it as part of a longer-term strategic alignment (in Australia and NZ).

“They see themselves as a global payments provider and we are working together to improve and add additional products and features to our payments offering ­domestically.”

 

He said some of those would be rolled out via the CBA banking app and its start-up platform x15.

But CBA’s half-year results presentation showed a sharp reduction in customers under the age of 35 who describe the bank as their main financial institution.

Mr Comyn said he could only attribute that to the sudden drop in immigration and international students last year, which are large areas of focus.

My Comyn also said CBA was closely looking at whether to make adjustments to its own real estate footprint, given COVID-19 had markedly changed the office working environment. The bank employed 42,720 full-time equivalent staff as at December 31.

“We are contemplating what sort of footprint we need for the Commonwealth Bank, particularly our head office locations over the next several years,” he said. “Obviously we make a range of assumptions around that, and we’ll continue to revisit that, as we anticipate we’ll be in a hybrid working environment for some time.”

More broadly on the commercial property sector, Mr Comyn said: “At least to date, we haven’t seen a lot of pressure on valuations. We would expect some higher vacancy rates but we anticipate that will be absorbed in calendar 2022 and 2023.”