National Australia Bank is eyeing a lift in home loan revenue thanks to a recently-completed technology overhaul, which it says is already turning more customer inquiries into loan sales.
As most banks look to plough more capital into home loans, a key project for NAB in recent years has been the mass roll-out of the platform used by thousands of staff use to open up new bank accounts, loans and credit cards.
![A long-running upgrade of NAB's technology system has been rolled out to all its branches.](/web/20161117184300im_/http://www.theage.com.au/content/dam/images/g/q/5/q/e/u/image.related.articleLeadwide.620x349.gsnjuy.png/1479105200951.jpg)
The new system, which has in recent months been rolled out in NSW and Victoria, is forecast by the bank to cut costs by automating manual processes, which analysts say could lead to job shedding. It is also leading to a higher proportion of loan inquiries being converted into sales.
It comes as all banks are forced to spend heavily on replacing their technology systems to compete with online lenders, which in some cases use algorithms to approve customers for unsecured credit within minutes or even seconds.
NAB's executive general manager of retail Bob Melrose, said that since the system was installed in South Australia last year, the proportion of customer inquiries that ended up with loans being drawn down had increased 20 per cent.
"I always think about that as more satisfied customers, and obviously there's some flow-on benefits for us in terms of revenue as well," he said.
The proportion of inquiries that were turned into sales was previously less than half, but that is no longer the case in the state, he said. The bank expects a similar bounce in the far larger markets of NSW, Victoria and Queensland.
"We're starting to see encouraging signs in those states at the moment, and we will continue to see those benefits grow over this year and next year as well. There can only be upside now for each of the states," Melrose said.
CLSA analyst Brian Johnson has predicted this technology change will also lead to shedding of staff – a growing trend as banks look to protect their bottom lines. Mr Melrose said the changes would lead to fewer staff processing loans, but he did not know if it would result in fewer staff overall.
Lenders say the time it takes them to approve a loan is critical as it is a key influence on whether customers end up shopping around for a better deal – a trend that has pressured bank profit margins.
"The worst thing that can happen is if the customer is waiting too long, they get itchy feet and they start to pick up the phone and talk to others," Mr Melrose said.
NAB previously took two to three weeks to approve a home loan from start to finish. Mr Melrose said under the new system almost a quarter of its loans were now approved in one and a half days.
The system is also slashing approval times for credit cards by 28 per cent to 2.1 days, and personal loans by 44 per cent to 2.9 days.
Retail banking is a key priority for NAB after it this year offloaded poorly performing life insurance assets and its troubled United Kingdom bank, and Mr Melrose was appointed to run retail in September.
The upgrade is the result of a broader technology project worth more than $1 billion known as NextGen, which was launched in 2007 and dogged by delays and cost blowouts.