Good morning, everyone, and welcome to Westpac's Market Update. I'm Justin McCarthy, General Manager of Investor Relations. Before we commence, I acknowledge the traditional custodians of the land on which we meet today. For us in Barangaroo, that's the Gadigal people of the Eora Nation.
I would like to pay my respects to Elders past and present and extend that respect to all Aboriginal and Torres Strait Islander people. I'm pleased to join today by our CEO, Anthony Miller, CTO, Peter Herbert, and CIO, Scott Collary. After the presentation, we'll move to Q&A. We'll take one question per person if we can. We've got a lot of you here, and there's plenty of time after as well. We'll take some questions online from Vevox. Instructions of how to use the Vevox, if you're online, are included in the invite. With that, Anthony.
Good morning, and thanks for being here. Today I'll share my priorities along with an update on Unite. It's day 102 for me as CEO of Westpac, and it's a privilege to lead Australia's oldest company and first bank. Westpac has a deep and profound heritage. I've seen this firsthand as I've travelled around the country meeting our customers and our people. I'm extremely energised and excited about the opportunity that is in front of us.
We have 35,000 people galvanised around our ambition to be our customer's number one bank and partner through life. Last month, I met with our 4,000 people leaders, all of whom are aligned on our direction and our five priorities. First, customers. We're driving a whole-of-customer approach.
The more a customer engages with us, the more insights and intelligence we have into their needs, enabling us to serve, support, and protect them more effectively. For us, stronger relationships translate into higher returns. It plays to Westpac's strength. Our priority is to win the whole customer relationship by delivering the whole bank. This requires consistent service excellence across the app, phone, and branch.
We need to be the best in market. To improve service, we're mapping processes from the customer's perspective and ensuring that everyone in every role, everywhere across the company, understands how their role impacts the customer. This includes functions such as risk, finance, legal, credit, and compliance. Also, we need to reduce complexity and make work easier for our people at Westpac.
We're calling this the One Best Way, where we will apply or offer the best process, product, or service one way across the company without exception. That alone, however, will not get us where we need to be. We're innovating across the consumer, business, and institutional banks. For our retail and small business customers, Digital Banker is our updated staff-assisted one-best channel.
We aim to better serve our customers through one central portal for 20,000 customer-facing staff. It captures all customer interactions and needs, providing a more consistent customer and banker experience. For business, we've launched BizEdge, our new lending origination platform that will guide our bankers and customers through the application pathway that best suits their needs and delivers the fastest loan decision. Via BizEdge, we are progressively digitising and automating the entire process end to end.
Pleasingly, GenAI-assisted code generation has improved developer productivity on this project by 20%. For institutional clients, Westpac One will be our new platform, bringing together real-time treasury management, FX, trade, and lending with powerful data insights. It's progressing extremely well. These investments in innovation support our ambition to be number one in customer service.
Our second priority is people. Westpac must be the best place to work because a market-leading employee proposition underpins a market-leading customer proposition. Pleasingly, we have a strong foundation. We have great people, and their motivation is high, with our OHI engagement score of 80 already in the top quartile globally. Unite, however, has a very important role to play here, as it will make work easier for our people. We also recognise the need to continue to invest in our people's capability.
For example, we have relaunched the Business Performance Academy for bankers to develop their skills and knowledge through targeted training programs and hands-on experience. The work we've done on risk management in recent years under CORE has been transformational. We recently received our final Promontory report on the transition, which concludes we are now fundamentally better at managing risk. We're ensuring these changes are embedded across the company.
Our focus on risk is framed around approaching everything with an end-to-end mindset, simplifying the bank using One Best Way, and encouraging positive risk behaviors, in particular the speak-up ownership culture. Ultimately, these are fundamental to running the company well. Transformation, in particular Unite, is key to becoming a simple and strong bank that delivers for customers and shareholders. To elevate the focus on transformation, Peter Herbert has been appointed Chief Transformation Officer and has joined the executive team.
The ability to constantly change what we do and how we do it must become a core capability of this bank. As it stands today, we are not where we want to be. Our ability to change quickly, efficiently, and safely is limited by our complexity, as we have duplicated products and too many processes and systems. This complexity is a drag on our ability to serve our customers, compete, and deliver the right return to our shareholders.
We have scale, but to realize the full benefits of this, we need to simplify our operating environment. For example, today in mortgages, our market share is 21%, but we have multiple systems end to end which increase costs, reduce efficiency, and heighten the risk. As a result, we do not capture the benefits of our 21% market share.
Unite, which is our business-led, tech-enabled simplification program, will deliver this scale advantage for the group. You will hear from Peter and Scott on this, but in simple terms, Unite will give us One Best Way to serve our customers and run our business. If we get all that right, performance will follow. We measure our performance on market position and return on tangible equity. We will grow, but in a way that delivers the right return to shareholders. Consumer banking remains extremely competitive.
Our consumer deposit franchise, however, is a real differentiator for us. In mortgages, we are targeting growth in line with system excluding RAMS. However, growth will not be pursued at the expense of return. We are focused on improving the proportion of first-party mortgages as part of deepening our relationships with our customers.
In Business, we are targeting growth in higher return sectors, including agri and healthcare, along with the SME and small business segments. We also have an opportunity to improve returns with existing customers where we have not been serving their needs. For example, we're focused on increasing customer utilisation of our foreign exchange products and services, where we have some market-leading capabilities.
In the institutional bank, we aim to be number one in our target markets. We've had strong balance sheet growth. As I mentioned earlier, we are investing in our cash management platform, Westpac One. This will set us apart. Our tilt to business and institutional banking, along with more focus on returns in consumer, supports our balanced approach to driving growth and generating return for our shareholders. Westpac's cost base has been a persistent issue, and we must structurally lower costs within the company.
The simplification of products, processes, and technology through Unite is critical to achieving this. Finally, doing all of what we've set out to do, but doing it sustainably, balancing returns, managing risks well, and remaining mindful of our stakeholders' expectations is integrated in how we do business. Unite is about implementing One Best Way across the bank without exception.
Our technology at Westpac is not older or less capable than anyone else's. We just have too much of it. We have too many products and processes supported by multiple technology stacks. From Unite, we expect to see better customer and employee experiences through service enhancements, and more particularly, that we have more time to spend with our customers. We also expect to see increased shareholder return.
Unite will reduce the cost of run and change and will support us closing the cost-income gap with our peers, and as a result, drive a sustainable improvement in ROTE. The mortgage simplification program within Unite brings to life what we get. We are simplifying mortgages end to end through a series of initiatives with the key activities outlined in this slide in front of you.
These initiatives combined represent a significant portion of work within Unite and span almost five years. The benefits are significant. We're moving to one suite of mortgage products, processes, and applications that will reduce costs by approximately $120 million per annum and deliver a more consistent customer and employee experience. I'll try and bring this to life a little bit more for you.
Recently, we had to implement the government's Home Guarantee Scheme in mortgages, which required us to deal with multiple system changes, and it cost us $17 million. In the post-Unite target stack, that would have only cost us $10 million. Peter will cover the four distinct phases of Unite. The mortgage initiatives are in the simplify phase. We're delivering benefits to customers already, having recently extended the option to hold multiple offset accounts to all home loan customers across the group.
When we complete this set of initiatives, we'll have consolidated for sale products to nine, streamlined our processes, and consolidated our systems to eight. A simpler operating environment will allow us to run the business more cost-effectively while also freeing up our people's capacity. For Unite as a whole, we're making good progress. We have refined and optimized the plan, consolidating the initiatives to 60.
Last year, we made the decision to reduce our deposit processes from three to one instead of the original plan of two. This required a new approach to our planning, impacting approximately a third of the initiatives we had scoped last year, including a new plan for nine initiatives.
The additional planning is progressing really well. A one deposit processor target stack reduces risk, lowers the cost of change, and facilitates a much smoother transition to a fourth-generation processor in the future. Twelve months ago, we had just five initiatives underway. Now, 41 are in progress. Pleasingly, we've also completed four initiatives. Like all large change projects, there will be challenges. As we progress, we can expect changes and re-sequencing will be required.
We still expect Unite to account for approximately 35%-40% of total investment to spend across FY2025 to FY2028, and we're projecting spend this year of approximately $600 million. Accelerating the timeline of Unite isn't feasible at this point. This is a hard programme, but we have to do it. We have no choice. We must get this done. We're using a traffic light system to indicate the status of our initiatives.
Currently, most are green, a few are red, and we are focusing on getting them back on track. We will be transparent on the progress until this programme is completed. Risk management is a fundamental part of this programme, and we have firm operating principles in place. Unite is business-led, driven by the commitment and alignment of the executive team with backing from the board.
We have established a governance framework reinforced by the three lines of defence risk model, which was embedded as part of the CORE programme. The transformation is driven by the business with support from technology and data experts, and this is reflected in the three-in-a-box operating model. Overseeing this work is the programme leadership team, a dedicated group of experts who meet weekly to focus on supporting delivery. At the next level of governance, executives are accountable for their respective divisions, and this is reflected in their remuneration scorecards.
The relevant leadership team meets with me weekly on Unite, 7:00 A.M. every Monday. The board also meets regularly, and a Directors' Working Group with extensive transformation experience has additional oversight. Peter Herbert will now discuss our transformation agenda and Unite.
Thanks, Anthony, and good morning. I'm pleased to be here in this new role. Across the company, we have a bold transformation agenda driven by enterprise initiatives and Unite. My job is to lead this program to drive change that delivers sustainable returns and makes Westpac a leader in service excellence. A CTO team provides clear coordination, oversight, and accountability for all transformation initiatives across the group. We're also responsible for ensuring all associated investments and resources are optimized and aligned to our priorities.
Each division, consumer, business, and web, as well as technology, customer and corporate services, and finance are responsible for their own Unite initiatives. That means group executives are accountable for outcomes and meet weekly to stay on track. Within each business, transformation leaders have a matrixed reporting line to me. This structure fosters alignment and accountability at critical levels, ensuring we maintain a coordinated and focused effort.
Transformation leaders are collaborating with teams of subject matter experts to drive initiative delivery. We're equipping them with the best tools, guidance, and support to ensure success. As Anthony mentioned, Unite comprises four stages, with the lower half of the slide highlighting our progress for each. Every initiative is unique, and depending on its scope, might not undergo every stage.
Discovery involves examining the business case for all initiatives to ensure they deliver genuine and sustainable benefits. The decision made last year to transition to a single deposit processor required us to rework initiatives and extend the time allocated to discovery. This stage represents a small fraction of the overall budget and is expected to conclude this year as we progress more initiatives. Simplify involves leveraging the strengths of our existing products, processes, and systems to adopt an optimal unified approach, our One Best Way.
This means finding the best way to operate across the group. For example, in mortgages, offering the same products across our brands. For certain initiatives, we will soon commence the implement phase to address the complexities of our multi-bank system. This work will extend through FY2028. Finally, once our products and processes have been fully transitioned to our One Best Way, duplicate systems will be decommissioned, reducing ongoing operating and change costs.
We will use this framework to provide updates on our progress. To date, we have completed four Unite initiatives. On the right-hand side of the slide, you can see the initiative costs and benefits. In New Zealand, we moved away from two foreign exchange systems to a single unified platform. With an initial cost of AUD 8 million and cost savings of AUD 5 million per annum, financial benefits will be realized next year.
In consumer, new customers now have one best digital way to verify their ID, making it faster and easier. With an initial cost of AUD 20 million, we expect to see significant cost savings of AUD 15 million per annum. We recently announced Westpac customers can now access multiple offset accounts, a feature previously only available in our other brands. This change will provide greater choice around managing finances and help with NPS. In WIB, we consolidated two versions of Trade Bank into a single optimal system.
This initiative was delivered ahead of schedule and within budget. Moving to initiatives for this year, Anthony covered the simplification of mortgages and the significant cost savings that will deliver. Digital Banker is the one-stop shop our bankers will use to serve customers. It gives our bankers a complete single view with no more jumping between screens and systems.
It will improve the employee experience while reducing complexity and risk. In collections, we're consolidating our platforms from seven to one, called AssistNow. This will provide faster and more flexible service to home loan and credit card customers who need extra support and save the bank $25 million per annum. We're simplifying fraud operations to one workflow solution. This will provide consistency in process execution, improving our productivity and customer service. Finally, we're creating one wealth platform by completing the Asgard migration to Panorama, delivering a more streamlined advisor and customer experience.
This has an initial cost of $70 million with an expected $40 million annual cost save. In summary, I'm pleased with the progress we've made so far. There are some major projects ahead of us, but I'm confident they will deliver major benefits. As CTO, I look forward to driving this project through to completion. Thank you, and I'll now hand over to Scott Collary for an update on technology.
Thanks, Peter. Good morning. Today, I'll talk about our technology strategy, Unite, the progress we've made in simplifying our foundations, and also outline our use of AI, both to help with the work in Unite, but also across our customer and employee experiences. As you can see, our four key technology principles haven't changed. They really make tech and banking work better, cheaper, and faster for customers and our people.
Under the principle of build to change, we've adopted a component-based architecture, basically modular banking, making it easier to change, more predictable, and much more efficient. Faster change gives us the ability to build best-in-class experiences and platforms for both our customers and our people. Evergreen means we're continuously current.
It enables our team to just keep all of our infrastructure, platforms, systems up to date. Instead of these cyclical big projects, this allows for continuous incremental upgrades. Automation is our third principle. It means automating everything possible: testing, change processes, production pipelines, controls. Benefits are obvious. Fewer defects, faster deployment, and it's much cheaper to do.
Finally, our technology is designed to support customer needs through easy, innovative banking. Our customers demand this, which is why being digital to the core is one of our key principles. Moving to our areas of focus, Unite will be fundamental to making Westpac simpler and easier to do business with. We're creating world-class experiences in both products and platforms: Westpac Live, BizEdge, Westpac One. Those are examples of this objective.
To get the best benefit of our simplified foundations, we need our engineers working efficiently to build and integrate solutions, solve problems, and improve customer experiences. To that end, we have the Westpac Mesh development platform. When using this environment, our engineers rank in the top 20% globally. Many of our best engineers are in the top 10%.
Right now, about half of our work is in that platform. As we retire more legacy systems, that percentage will increase. Intelligent banking involves using advanced capabilities in data analytics, machine learning, and other forms of AI. We build these into our platforms and our operations, and I'll give some examples later. You've heard about Digital Banker. Peter and Anthony both mentioned it.
It's a great example of how intelligent banking is capturing and organizing data to give real-time customer insights to our people, provide more meaningful interactions to our customers, and we've been rolling this out over the past year. We're continuously supporting and protecting customers in the fight against scams. We do this through education, online tools, and using some pretty cool technology.
The combination of AI and automation helps us detect suspicious activity, patterns, and risks, continuously strengthening our defense against fraud, scams, and cyber attacks. Finally, Unite. Unite builds on our enterprise roadmap that was approved in 2021. It was one of the first objectives of the new business and tech leadership team, and it focused on simplifying the bank. The Unite program is now leveraging and accelerating that simplification.
Last March, we were nearing completion on Unite's foundational technology elements, and these have now reached our target state. Some milestones there, including getting the remaining legacy data platforms to the cloud, building out our landing zones in AWS and Azure, ensuring safe, fast, reliable adoption of those environments. We finished our software-defined wide area network. It's got 10 times the bandwidth at about a quarter of the cost of the traditional nine legacy networks we were running.
That team has won local, regional, and global awards for that product and that delivery. We moved from six to one desktop platforms and are now evergreen, which has a much lower cost to the organization. We have our primary developer platform in Westpac Mesh, enhancing engineer productivity. Additionally, over the last year, we've had a 400% uptake in the use of AI from our engineering teams.
Right now, we have about 3,000 engineers actively deploying code daily. 2,500 of those are using AI on a regular basis. Those that do, we've seen as much as a 40% uplift in their productivity. Anthony mentioned BizEdge, I think, is a 20%. That team was one of the first adopters. We've continually upgraded in that program. Many of you are familiar with this slide. To recap, Unite's about merging technology.
It means we're reducing redundant applications, consolidating tech, and standardizing on the way we move forward to the One Best Way. Consolidation will take out about a third of what we had. With now the foundations at target, we can really move forward with the rest of the application layer. A few examples starting from the top, one bringing all the award-winning Westpac Live capabilities to the rest of our franchise.
Of course, Digital Banker, which we mentioned in consumer and small business. We have work underway in preparing the move from the three primary deposit ledgers to the one. We have completed a target consolidation in collections. This is a huge win for employees and allows us to more efficiently help customers in need. The common thread in these layers is an emphasis on simpler technology, end-to-end digital experiences, faster time to market, and really improving the tools our employees have.
We're investing in AI and data to be more efficient and insights-driven. This is creating more personalised customer experiences and helps our team serve customers better, safer, and in a more responsible way. Our AI accelerator creates enterprise-scalable platforms, allows us to leverage various forms of AI by plugging in, testing, and deploying new capabilities at speed. We have deployed four of these company-wide so far.
We have about a dozen or more use cases actually working, and we have 300 more lined up ready to go. We've been using advanced analytics, predictive AI, and machine learning for a while now. Our new cases focus heavily on generative AI and more recently going live with the Agentic AI. Examples, they are on the right, Relationship Banker AI Assistant. This went live this month. It helps bankers focus their time on the customer tasks versus the administrative tasks.
There are multiple AI agents integrated. They'll handle the more time-intensive things, allowing our bankers to really focus on customer. The Westpac Knowledge Assistant is our virtual assistant. We've deployed it within mortgage operations and are now rolling it out to business lending. Agentic AI represents a new approach where autonomous squads of agents collaborate to complete tasks by understanding language and instructions.
We've used this to speed data migration and development of data products. We've delivered exceptional efficiency gains. Tasks that previously took an engineer as long as six days are now being completed in minutes. Overall, we made really good progress against a significant amount of complex work. By doing so, we're positioning Westpac to be a simpler, more efficient bank. With that, I'd like to invite Anthony back. I look forward to the Q&A and seeing some of you in the breakout session.
Thanks, Scott. We've set key metrics with FY2029 targets to measure our progress in the years ahead. These will be a regular feature of our reporting. Service excellence is foundational to our future success, and we are aiming to be number one. We plan to achieve this through our transformation agenda and innovative capabilities to make Westpac a market leader.
We are simplifying our operating environment across product, process, and systems to deliver the One Best Way via Unite. Unite will pave the way to unlock the benefits of scale and profoundly improve the service we can deliver to our customers. We will be open and transparent with you as we drive to complete Unite on time and on budget. We're also innovating across the bank through capabilities such as Westpac One and BizEdge, as you heard previously.
A simpler operating environment, along with insights and new innovative tools, will make it easier for us to serve our customers and compete. Our aim is to deliver an improved operating and financial performance as we achieve results across our priorities, culminating in a below peer-average cost-income ratio and an above peer-average ROTE. I'll now hand back to Justin for Q&A.
Thanks, Anthony. Peter, Scott, would you like to come up to the table here? Plenty of you in the room, so we might limit it to one question per person if we can. If we've got time, we'll circle back. There'll be some microphones coming around. John, you're the lucky one. John Mott, Barrenjoey.
First question. Anthony, before you started, you really talked about, "I want to get this underway. I want to accelerate this programme." You've come up here now and you're saying, "Okay, I looked at it. I can't accelerate as much as I kind of hoped." When you look at it, the Unite programme's still only 35%-40% of the group investment spend and $600 this year. It's still a fraction of the amount of money you're spending on risk and compliance spend, investment spend, which is still over $1 billion. At what stage do we get to the end of this risk and compliance investment spend, which is just being an ongoing drag for well over a decade? Can you then get this spend and redirect it to Unite so you can accelerate this programme as you actually intended?
John, this is my first question ever as CEO, so it's a pretty special moment for you and I. I'll just make a note of that, please, Justin. I mean, I've been in the role 102 days, and what I was very keen to do when I got into the role was really have a look at the plan we'd put together. The plan is still coming together in many ways, that is Unite, and ask ourselves, "Can we go faster?
Can we do it more cheaply?" After 102 days, the answer is we do not think we can go faster, but we are going to consistently ask ourselves, "Can we do more? Can we get it done? Can we get it done more cheaply?" Let's see where we are in 204 days because the work is ongoing. We are certainly now very much focused on how we put the whole plan together and the whole sequence that is needed over the next three to five years.
I think the more work we do there, we are realizing there are also potentially a lot more benefits than we thought. Potentially there could be opportunities to go faster. You are right. I mean, the spend and the focus of the company for the last four or five years has been very much on fix, remediate, restore effectively.
The team's done a magnificent job. We would expect to see the risk spend start to come off through particularly FY 2026, 2027, 2028. We also need to recognize that a lot of the spend is as a result of the complexity and the duplication that we currently have to navigate. In some respects, we should be able to reduce further the risk spend once we get to that target state, One Best Way on one technology stack.
I would say that we definitely will see a reduction in risk spend. The team's done a great job as we complete CORE, and we've embedded all of those requirements. I would expect it to come down, but it'll come down faster as we get through Unite and even more so once we complete Unite.
Victor, I think you've got the mic.
Thank you. Victor German from Macquarie. Anthony and Justin, thank you for providing quite a lot of numbers in front of us. It's good to be able to measure your progress over time. If I look at your cost objectives, and I don't want to push friendship too far, but they don't appear overly ambitious. At the same time, if I look at your cost-to-income target, it looks very ambitious. You're starting at this sort of 53%-54%.
Peers, if I average them out in 2029, are sitting at about 47%-48%. Seems like a pretty ambitious target. Would you be able to kind of close the gap between is it cost-driven, is it revenue-driven? How do you think you're going to get there? Because historically, when it's revenue-driven targets, it's harder to achieve. Could you give me your thoughts?
No, thanks for the question. Definitely acknowledge that the majority of the way we see ourselves getting that cost-income ratio to the right spot is cost. Definitely revenue has some role to play. What I would say there is that what we see and what we know is the opportunity in front of us is that there's so much more that we can be doing for all of our existing customers that we're currently not doing, which would drive revenue without necessarily incremental risk, for example, or incremental products or incremental headcount. The example I would use is that in business bank, our market share in the FX is approximately 11.5%. We should be really about 18%-19%.
That just means we've got an opportunity with a pretty good FX capability with an existing pool of customers that we currently haven't been pursuing in the way we should, and we are going after that. That will help us address revenue. That's but one example. I would say the way I think about it, the way we've challenged ourselves is that if it was 100 units to get the cost-income ratio where it needs to be, it's going to be in the order of 60-70 units is cost, and 30-40 units would be revenue.
Matt, you've got the mic.
Good morning. Good morning, Matt Wilson, Jarden. Firstly, you're doing the right thing clearly. Look back over the last 20 years, we've seen a few false starts in this process. Congratulations on finally doing it. Have you spent time in the Westpac archives, in the library? Have you spoken to key alumni? Because there's clearly, and it's come out in the reports on Westpac, a scepticism towards the value of tech investment, a scepticism towards capability. As the CEO, your job is to change people and move them in the right direction to run to that One Best Way. How do you do it?
That is the exam question for me every day, Matt. Every day I'm focused on recognizing the following, which is what we have to do has been diagnosed and in front of us for a long period of time. Therefore, a lot of very capable men and women in various roles over many years have started and have never necessarily achieved it. I am very concerned about how do I make sure that we deliver on this? are two things that I think are really important.
One is the leadership team is absolutely committed to it, and the leadership team we are building, because obviously there are some changes as you are aware of, is very focused on this. The second thing is that what is interesting to me is how committed our staff, our team is to this. For example, we had a town hall that was run by Scott Collary and James Hutton in December last year, and we had 10,500 members of Westpac Group dial into a call to discuss this project.
Therefore, there's this resolve across the company to do what we need to do, and we must deliver on this because what they see, which we must solve for, is the complexity, the duplication, the waste that follows from the fact that we have too many products, too many processes, too many systems, and we need to tackle it. I think it's really, I think the differentiation here is that the leadership team's unequivocally committed to it. The board's unequivocally committed to it. The shareholders absolutely want it. Most importantly, we've got all the people at Westpac who realize this is what we're going to do, and we're going to do it. Brian, you've got the mic.
Brian Johnson, MST. Thanks for a great presentation. A lot of numbers there. It'll be difficult to crunch it all out. Anthony, you've said today that you have a meeting once a week. This is a great opportunity to kind of explore the cultural aspect of what you want to bring.
Having followed Westpac for quite a while, it seems to me Westpac have had more false starts than I've had hot dinners, and that's obviously a lot. Can you run us through in these weekly meetings what happens when someone is running behind, and how quickly can you bring them back to pace? Because inevitably, it's wonderful to pretend everything goes as planned, but it doesn't. How do you approach it when something is running behind?
We will invite Peter to make a few comments as well. The purpose of that meeting is to understand what is slipping or what is a problem, and then more importantly, give that leadership team immediate permission to go and do what needs to be done. The most important thing, though, for that meeting to work, and it is so key, is that people are willing to share that it's not going well.
Classically, the behavior would have been, "Let's see if we can make sure we can fix it. Let's try and solve it ourselves." What we want and what the meeting is designed to do is to make sure people bring their problems early. What we're seeing is if people trust that they just elevate and escalate those challenges earlier, we get the right people around, and we can solve these problems. We do it really well when we know the problem exists.
I think in the past, Brian, the challenge would be that we got to these issues or these issues were not aerated or properly and intelligently interrogated until it was a bit late. What we are focusing, as I said, with this meeting and this environment that we are creating is, please bring out the problems. Do not come and tell me the program is green. I am not interested in the advertisement. I am interested in what is not working and how, therefore, should we react and how do we change it. Peter has done some excellent, put in place some excellent initiatives of just getting every single person who has a role to play in that initiative to ensure that it delivers. You get them in the room.
We don't quite lock the door, but we ask them to stay in the room for the necessary period of time until we've worked out what we're going to do and how we're going to respond to it. I'm not sure, Peter, is there any have I done that, Justin?
Just two quick points I'd add. The 7:00 A.M. Monday meeting is a triage meeting. Anthony said it's focused specifically around what are we doing that week, what are the blockers. Very clearly, Unite takes priority over other things. It is how do you triage and resolve that?
One other thing I'd just add is that we've asked to make sure that the best people, the best of the best, are on Unite. Everyone has to have their best athletes on this programme because its benefits for the company are profound, and its criticality for the company, as I said, is just profound, and we need to deliver. Andrew?
Thanks, Justin. Andrew Lyons from Jefferies. Anthony, when you compare some of the costs and benefits disclosed in the presentation today, we see solid implied returns on investment, but a fairly wide range across the different projects. Just with that in mind, can I just ask how you think about target ROI across different projects within the broader Unite programme? I guess how does that then feed into executive KPIs?
Yeah. I'll also let Peter make a comment if he'd like. Not every initiative is equal. There are some initiatives where we need to just do it. It is very hard to tangibly, causally connect it with, for example, a cost out or, for example, an immediate lift in revenue. Every initiative is so critical to getting to that target end state. That is the first point. You will see, for example, in the slides in front of you, that there were a couple of initiatives that were not rated green.
Some of the reasons why they are not rated green is that we are not happy with what they think is the outcome that we will get, whether that be cost out or potential revenue that follows. We are doing and challenging people to do more work and then, more importantly, commit to that outcome that we need from that particular initiative.
We are focused on making sure that we causally connect everything we do, every investment we make, to the idea that we're driving a better One Best Way and we're driving a better cost-income ratio for the group. Peter's ready. No? Okay. Thank you. There's our mic. John?
Thanks. Thanks, Anthony. Great presentation. I just wanted to ask you, obviously, the bank in the past has spent a lot of shareholder money building out systems. You've got $3 billion of capitalised software balances that you're carrying. Just wanted to get an understanding on your approach to retrofitting what you currently have versus an approach of starting over again. How should we think if you do go down the path where some of these software balances are deemed or these systems that you've built are deemed obsolete? How should we think about it in terms of how you take an approach to potentially writing this off?
Yeah. I will invite Scott to make a couple of comments. What we're doing is clearly identifying One Best Way and then moving it to one particular technology stack. We are certainly focused on expensing. At this point in time, the focus is approximately 75% of the spend on Unite will be expensed. What we identified and what's the case at Westpac, and Scott can please contribute as you see fit, is that we've got actually some really good technology. We've actually got a lot of good technology. We've got a lot of what you need to take this bank forward and be very competitive. We've just actually got too much excess technology and too much duplication, which introduces cost and risk.
What we will have to navigate is once we identify that One Best Way and we're moving that particular one product onto One Best Way onto one technology stack, of course, at that time, if there is a need to address any capitalized expenses from the past, we will solve. That is also part of the work we're doing in terms of finalizing these plans and trying to make sure that is the right investment dollar for us to deploy as we go forward.
More of our investment dollars have been on the red stack, the Westpac stack, over the last few years. Those investments, where we've made them, were very competitive in that environment. This is about simplifying to that environment and unlocking that capability across the rest of the franchise. We'll see a lift both in kind of performance and capability as we do that.
The target environments are good. They're scalable. They run well. They have low incident rates, very resilient. That's the target that we're going for. I would say over that period of time, we typically use a three-year schedule. As you look forward, any investments that we've made over the last couple of years in some of the other stacks will be worked off before we get to the consolidation anyway. Matt? Thank you, Justin.
It's Matt Koder from Bank of America. Thanks for taking my question. If I'm looking at slide 14 and the exhibit there, following up on the ROI question, you seem to be flagging, you've called out, thank you for that, about $900 million of costs driving about $200 million of benefits.
Should I extrapolate a similar rate of return across the remaining projects? Look, that potentially is a slippery slope. But certainly, that's one way to look at what I think is available from Unite, what we think is available from Unite. Now, remember, other initiatives are still being properly planned, properly completed, properly understood. We've taken, whenever we've put this in front of you, a conservative assessment, both in terms of the benefits, and we've also taken a conservative assessment or cost.
Yes, I think it's indicative. We do see we do need to do more work, and we've got to finish that work off over the course of the next six months. I would be, our goal is that that kind of benefit outcome and then some is where we get to with Unite properly executed on time on budget.
Ed? Thanks.
Ed Henning from CLSA. Today, you talked about your systems are not older than peers. Can you just touch on, obviously, over the next three years, you're merging systems and gave a great presentation on what you're trying to achieve. With other banks that do not need to merge systems, obviously, they're going to spend a significant amount of investment on systems and improving what they're doing. Why are you so confident that because you've got targets there on a relative basis on cost to income, how do you think about the other banks pushing forward and using new technology where you guys are merging your currently good technology?
I've got the comment a little bit about the technology comparisons. Our investment envelope is definitely an allocation to Unite, but we're also innovating. We're also building some unique capability, whether that be Westpac One, BizEdge, etc.
We are building that on the target tech stack that we have, which is very, very capable and more than capable of supporting the innovation that we are delivering on in those two programs. We do have the right technology in place. We have just got too much of it. Unite is all about removing all of that duplicative technology, reducing that cost to run and cost of change. In terms of our stacks that we currently have.
I think that is absolutely true. I think the other piece of that is that it is 35%-40% of our investment. We are still investing quite a bit in things like Digital Banker, Westpac One, BizEdge, AI, data platforms, more advanced analytic capability. All those investments are still being made.
I would say I don't feel necessarily that we're burdened with the transition any more than some of our competitors and what they have to do. No one's really working on a clean greenf ield at the moment. You can go talk to them about all the challenges that we're all kind of faced with in terms of keeping legacy up to date, moving to the cloud, adopting AI. Everyone's got some of those same challenges.
My view is the technology that we are targeting to go to is really working well. We've gone from a really high level of incidents, say, five years ago, to a very low level of incidents lately. Things do happen, and you respond to them quickly, and the teams are doing that. Frankly, I feel really comfortable with the technology stack that we're moving to.
Andrew?
Andrew Triggs from J.P. Morgan. Can I just ask a question? The main cost saving that you've identified is in the consumer bank with $300 million of annualized cost savings planned by FY2029. That's only sort of 3% tailwind to group costs. Can you give us a sense on a high level some of the other key building blocks to get towards that sort of 60-70 units of the 100 units that you're looking to gain through the program?
That is where there's obviously quite a bit more work that needs to be completed in terms of those initiatives. Certainly, one of the areas where we will see considerable reduction in cost is just that we've just only got one technology stack. Leave aside the consumer, that we're just running one technology stack will just immediately change the cost configuration, the risk configuration that we currently have to navigate.
The planning and the work that's still ongoing will help further isolate those other areas within the group. There's still much more that I think we can see as available in consumer as well, based on the work that we're doing and still doing.
When you look at where most of the duplication of the technology stacks, it's in consumer and small business. The institutional bank had less of that, and we were working quickly to get them through their part so they could move on with Westpac One and some of the other great initiatives they've got.
Andrew, we have really worked to make sure that we are being prudent and conservative when we put these numbers in front of you. We have real aspiration for what we can achieve. That little example I gave you in my presentation of $17 million in a target state going forward is only $10 million. If we then make the assumption that the need to change is never-ending, as it has been for the last 5-10 years, and we are likely, you can see how it will have a major contribution to our cost.
Sally?
Good morning. Sally Hong from Morgan Stanley. Just following up on Andrew's question there, can you talk to how much it will cost you to derive that $300 million of benefits in the consumer division? Can you also give us a sense of the cost and benefits we should expect in the other divisions?
How much will it cost to derive?
Yeah, how much will you invest in the consumer bank?
It is across a set of 60 initiatives, and we are up and running on 41. We have still got a few more to finish the scoping of and the planning of. It is hard to say with the specificity that you are looking for today about what we would spend and what that means directly for consumer. Those 60 initiatives, a lot of it does involve consumer. There is also, however, lots that impact business and wealth. For example, you saw in Peter's materials, we are moving from Asgard onto Panorama, and we are spending AUD 70 million for an AUD 40 million run rate saving there. It is a suite of initiatives.
There's a lot of different component parts. And so it's a little hard to say, "We will just spend $500 and get $200 in consumer. We'll spend $500 and get $200 business wealth." You can't be as precise as you're looking for there.
Jeff?
Yep. Good morning. Jeff C ai from Jarden. Can you talk a little bit about how you intend to migrate St. George customers onto one stack without changing bank account BSB numbers and your medium-term plans on multi-brand? Thank you.
Unite's all about the multi-bank systems that we have. We have a number of different banks inside the group. What we need to do is reduce the multiple bank systems that we run and move to one bank system. That's what Unite's all about. It's got nothing to do with brand.
Reduce the number of banks we've got and then essentially move everyone onto that One Best Way that sits on that one technology stack that we've got, which then allows us to run the business as we need to in terms of cost to run and cost to change. In terms of the potential impact on customers of those changes, that's why all the work is ongoing, and that's why a lot of initiatives are still being heavily planned and worked through, because the goal is to make sure that in any move from one particular system to the other, there is minimal to no impact on the customer.
Carlos?
Thanks. Carlos Cacho from Macquarie . I'm just interested in the timeline for your investment spend. You know you spent $107 million in the first quarter, goal of this year spending $600 million. You previously kind of guided to $700 million-$800 million. Should we take it that that ramps up through the year and by the fourth quarter, we're running at, call it $200 million a quarter or so on the Unite spend?
We're certainly a little slower in the outright spend on Unite this year because we wanted to do more work, and we wanted to challenge, is there different ways that we can go about it? I.e., is there a faster, more cost-effective way to go about it? We've been a little slower in spending on executing initiatives this year because we wanted to do more work. That's point number one.
Second, the work we're doing is to, in a way, make sure that we will arrive in FY2026 with the right resources in the right place, organized to do all the work we need to in the right sequence. We've yet to convince ourselves that we've earned the right to do that and to spend $800 million, for example, in FY2026. We've got more work to do. What will be the run rate come end of 2025?
We're still finalizing that, but it wouldn't be any more than $200 million a quarter. It's 35%-40% of our investment envelope that we'll be spending, and we won't be spending more than $2 billion is the way we've set ourselves and challenging ourselves to run this program.
We've got a few minutes. Nathan's up in the corner here. We've got a mic.
Good day. Thanks for your presentations. I suppose just a question in terms of Post-Unite investment spend. We are spending $2 billion a year. 35%-40% of that is Unite. You talked about how regulatory spend is coming off, already spending on innovation. Can we assume that the investment spend actually drops by 35%-40% Post-Unite? Or is there always going to be something to spend money on that keeps it at $2 billion?
Look, I mean, the decision I have got to make and the decision we must make on behalf of the shareholders is what is the right investment? At the moment, we think the right investment envelope we have set ourselves is approximately $2 billion, 35%-40% to Unite, to the extent that we see a reduction in the investment in risk and regulatory. The question for us will be, do we recycle that back into the business?
What is the best return we get for that investment dollar? You would like to anticipate or I suppose the aspiration would be that perhaps the investment spend will come off. That will be, in my mind, dependent upon, hang on, what's the best outcome that we can deliver for the shareholder in making that choice? As we sit here today, the choices we're making are totally informed by what's the best outcome for the shareholder. That's why it's 35%-40% on Unite, hopefully less on risk as we progress, and to the extent it makes a lot more sense to do a lot more on some of those innovations and those new capabilities.
If we can make sure the economics stack up, then we will recycle that investment there or return it back to the bottom line for the shareholder.
We do not have any questions online. We might pause it there rather than going a second round, because we will end up another half hour, guys. Thanks for joining us online, and reach out if we can help. Thank you very much.