Morning, everyone. Good morning and welcome to Westpac's UNITE 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 Kent Street here, that's the Gadigal people of the Eora Nation. I'd like to pay my respects to elders past and present and extend that respect to all Aboriginal and Torres Strait Islander people. Joining me today is Westpac CEO, Anthony Miller, and Chief Transformation Officer, Peter Herbert. After the presentation, we'll have time for Q&A. We'll also, for those people online, there's an opportunity to ask questions via the Vevox. You'll have instructions in your invitation. With that, over to you, Anthony.
Thank you. Good morning, and thanks for being here. It's been a year since I set out my priorities as CEO and our plan to deliver UNITE. Today, these priorities across customer, people, risk, transformation, and performance are embedded across Westpac, and they underpin our ambition to be our customers' number one bank and partner through life. UNITE is the cornerstone program of our transformation agenda, and we're well into its execution. The program is being delivered to benefit customers, our employees, and shareholders. While it is designed to generate efficiencies in its own right, sustainable performance depends on disciplined execution and consistent delivery every day. Much of the work that's underway on UNITE is happening in the background as we prepare for larger scale migrations. From an external perspective, changes will be most visible this year across Business and Wealth.
We recently completed the migration to deliver One Wealth Platform and today announced we're moving to One Commercial Bank. These initiatives are helping to reshape and improve our operating model. UNITE is an important investment in Westpac's future. It will reset how Westpac operates across products, services, processes, and systems through implementing one best way across the entire bank. This will further strengthen both our foundations and how we deliver for customers, our people, and shareholders. As we've said before, while we have robust and capable technology assets, we have too many. Simplifying our technology and how we operate supports us in becoming a more efficient, resilient, and customer-focused bank. For customers, this means delivering service excellence consistently, earning their trust to become their number one bank. For our people, simpler processes allow more time to be spent with customers, supporting our more engaged workforce.
For our shareholders, UNITE is an enabler, reducing the cost of run and change, helping to close the cost-to-income gap to our peers. We are making good progress on UNITE. There have been no overall changes to the program scope, timeline, or budget since our full year results presentation last November. Minor modifications have been made and are likely to continue to be made given the nature of the project. We've completed the first large-scale migration, and we're getting through foundational work, including building test environments and data optimization for future migrations. UNITE is being delivered through a central team of almost 1,800 people who draw on expertise across business and technology. This is supported by a strong governance framework. This framework provides clear and ongoing oversight and accountability from management through to the board.
The data, digital, and AI team supports the central team, and we are developing a set of practical AI solutions for UNITE. Impact assessments and testing are two areas where AI is contributing and can be scaled across multiple initiatives. Impact assessments are a key dependency for the majority of the UNITE initiatives. AI supports these by reducing the time it takes our teams to identify data lineage and assess downstream impacts. It has delivered more than a 50% improvement in efficiency, reducing impact assessment completion times from approximately 10 days to fewer than four days. A separate AI capability supports us with testing. Testing also sits on the critical path for many UNITE initiatives and is a key factor in delivery timelines.
A suite of AI testing tools agents, and agents are being used by our teams to lift productivity for a smoother transition into delivery, and we're seeing pleasing results. While this progress is encouraging, it is too early to extrapolate. AI is demonstrating positive early signs and will continue to mature and scale how we use it right across UNITE. Activities are underway across Consumer, Business and Wealth, and the Institutional Bank, and we're seeing how improvements are creating more connected banking experiences for our customers. We're using Digital Banker to serve retail and business customers. It provides a single consistent way to capture customer interactions and understand their needs. With customer information in one place, our bankers are better equipped to have more informed conversations and deliver consistent service.
The rollout of the front-end platform to our bankers is now complete, and we'll continue adding more servicing capabilities this year. Secure live chat is now available in the Westpac app, giving customers a simpler and more connected chat experience. We've consolidated two platforms into one, allowing customers to enjoy secure conversations with bankers via the Westpac app. Last year, we shared how we are simplifying mortgages end-to-end across product, process, and applications. This represents a significant body of work within UNITE, improving both customer and employee experiences. The sale of the RAMS mortgage portfolio contributes to the streamlining of our operations. It has also taken some pressure off UNITE since these customers no longer need to be migrated to the target Westpac platform. In business banking, the Controlled Monies initiative has delivered practical improvements for professional service companies.
It digitizes processes for customers across legal, accounting, and real estate firms who hold client funds on trust. Last weekend, we completed our first large-scale migration of UNITE, moving 60,000 Asgard customers onto our wealth management platform, Panorama. We now have more than 300,000 accounts with funds in excess of AUD 150 billion on Panorama. This was a complex migration that we executed safely and as we planned. Customers now have access to a more sophisticated and award-winning app experience with stronger security and broader investment choices in one place. Employees are working in a simplified structure with fewer processes and far less risk. A single wealth platform reduces complexity and cost, allowing us to compete more effectively. The One Wealth Platform initiative cost approximately AUD 17 million, most of which has now been incurred.
The savings are anticipated to be fully realized after decommissioning of the legacy Asgard platform. Today marks an important milestone for Westpac with the announcement of One Commercial Bank. This will simplify our banking technology and is a crucial step towards decommissioning Commercial Hogan and other legacy systems. As part of this migration, commercial business banking customers and employees from St.George, BankSA, and Bank of Melbourne will transition to a consistent banking experience and single brand under Westpac. These businesses will have access to better digital capabilities and a broader range of products and services, including real-time payments, flexible merchant solutions, and our market-leading banking app. The migration has been carefully planned and will be managed closely through disciplined execution. We have also applied learnings from earlier migrations, including One Private Bank, in which 99% of customers were retained, and One Wealth Platform.
To support our execution, we've designed One Commercial Bank to be a digitally enabled migration which is relationship-led. This reflects the importance of continuity in customer-banker relationships. I saw this firsthand when I was in and leaving Business and Wealth. Strong relationships built over time help customers navigate change and gives them confidence to grow their business. For this migration, commercial customers will remain supported by their current relationship managers and local banking teams from start to finish. This means bankers will also move with their customers to Westpac and remain embedded in their communities after the migration to provide a seamless service experience. Understandably, this was a big change for our bankers to initially digest. Once we talked through what it meant for them and their customers, their response was very positive.
With simpler systems and technology to use, they can spend more time serving customers while offering them a broader range of banking products and services. Our aim is to consistently be number one in NPS. We intend to start the migration of 75,000 commercial business accounts onto the target ledgers in the coming months. For this migration, continuity of customers' banking arrangements is paramount. We have completed foundational work to align policies and procedures so we can provide unilateral variation for 95% of customer accounts. This involves directly transferring our customers to like for like products, delivering a digital experience without the need for re-identification or any additional product application forms. SME and small business customers are not impacted by the changes announced today. The capability developed through the initiative positions us well to support future migrations as we continue to simplify the company.
In summary, UNITE's progress is on track with no changes to overall scope, timeline, or budget. We've completed a major migration, moving Asgard customers to Panorama to give customers a better overall experience and operate on One Wealth Platform. Next half, we'll commence our first large-scale banking migration as we create One Commercial Bank. There remains lots to do, and we are ready for the challenges ahead. Peter will now provide you with a more detailed update on UNITE's progress.
Thanks, Anthony, and good morning, everyone. Across Westpac, we're progressing a broad transformation agenda driven by both enterprise initiatives and UNITE. Since finalizing the scope for UNITE last year, we've spent the past six months focused on delivery. We're making good progress and have achieved all major milestones for this stage of the program. Clear alignment, openness, and accountability are helping our teams collaborate effectively and stay focused on what matters most, delivering for our customers, our people, and our shareholders. As an ambitious multi-year program, UNITE relies on disciplined and steady execution. To support its delivery, we established clear responsibilities and governance from the outset. UNITE is business-led and tech-enabled. In practice, business-led means that each segment, namely consumer, business, and wealth, are responsible for the outcome of their initiatives. Group executives are accountable to and supported by a monthly executive steering committee.
Reporting directly to me are experienced transformation leaders and the UNITE chief information officer. Collectively, they manage a centralized delivery team of approximately 1,800 people. Dedicated resourcing from the technology, data, digital, and AI teams provide the core technical capabilities needed for the program. This team structure supports an enterprise-wide approach to completing initiatives rather than by business by business execution. With the governance structure in place and the project scope set, we retested the optimal delivery approach. This allowed us to take a step back and consider all downstream impacts for each of the 57 initiatives. As a result, we grouped the initiatives into 10 work packages for more effective execution with end-to-end accountability. It has also provided a clearer basis for sequencing work and allocating resources.
Of the 10 work packages, the first seven are domain-based, reflecting the area of the bank where the change is happening. For example, in mortgages or business banking. They focus on simplification activities with an emphasis on process and product readiness. The remaining three work packages cover the common elements required to complete the domain-based work. I'm pleased the overall scope, budget, and timeline remain in line with that already disclosed. We invested AUD 195 million in the first quarter as the program accelerates towards a steady operating rhythm. This puts us on track for spend within our previously disclosed FY 2026 guidance of AUD 850 million-AUD 950 million. We expect UNITE to represent approximately 40% of annual investment spend in FY 2027, FY 2028, before stepping down in FY 2029. The 10 work packages contain a total of 57 individual initiatives.
Across the program, eight initiatives are complete. That leaves 49 still to be delivered, of which three are yet to commence. We're tracking the progress of the 46 in-flight initiatives against the traffic light framework. As at today, 38 initiatives are rated green, seven are rated amber, and one is rated red. Overall, this represents an improvement since our last update, with more initiatives rated green or amber. The initiative in red is the debit card simplification project. We face some unforeseen challenges and have clear actions to get its progress back on track. The status of initiatives will move throughout the program. For instance, the One Commercial Bank initiative recently moved from red to amber. This initiative was in its early stages, and we took additional time to confirm readiness and planning maturity before proceeding.
We closed these gaps by running a proof of concept pilot, which showed the migration tools and processes we designed work in practice. Insights from this informed a detailed and integrated delivery plan, which is now being agreed across all work streams. As a result, the initiative has moved to amber as we get ready for migration. During the past year, we've deepened our experience through the private wealth migration, recent Asgard to Panorama migration, and invoice financing, which is set to complete this month. To support future migrations, we're also undertaking preparation work such as our channel simplification, for example, the rollout of Digital Banker and the consolidation of two chat platforms to one, a new capability to archive customer data, helping to manage historic records and the future decommissioning of legacy applications.
The development and deployment of new AI tools to automate assessments of downstream impacts and testing. UNITE comprises four stages, with the first stage, discovery, completed last year. The program delivery encompasses the work underway across the remaining three stages of the project. The second and third stages of UNITE are simplify and implement. We revised how progress is measured across these stages. Previously, progress was based on the number of initiatives completed, which we presented in March and September. Given the variation in size and complexity across the initiatives, we believe measuring progress against key milestones offers a more accurate representation of the work completed and the activity remaining. Prior periods have been restated on a like-for-like milestone basis. For decommission, there is no change, and we continue to measure the percentage of planned applications we've retired, which lines up with the bulk of the cost savings.
We don't expect further modifications to the measurement of progress. We're committed to transparency and will continue to provide regular updates on our progress each reporting period. Moving to progress on the delivery stages. Simplify involves leveraging the strengths of our existing products, processes, and systems to adopt our one best way. This has progressed from 29%-44% complete. Implement will address the complexity of our multi-bank systems. This is where a significant share of the test and migration readiness work is concentrated. It has progressed from 13%-19% complete. Finally, decommission, in line with our plan, remains in the early stages at 10% complete. One of the major objectives of UNITE is the move to a single deposit ledger. The decommission of Commercial Hogan is the first step, reducing deposit ledgers from 3 to 2.
Commercial Hogan currently supports 40,000 customer accounts across wealth, commercial banking, and other business deposit products. The migration of these accounts to Westpac's core ledger Trading Bank will help us run more efficiently, innovate faster, and realize economies of scale. Decommissioning the ledger involves three separate migrations, each accounting for between 25% and 40% of the total accounts required to transition to Trading Bank. As part of the One Wealth Platform initiative, 10,000 cash management accounts were migrated to Trading Bank. The second migration involves moving commercial customer deposit accounts to Trading Bank. Importantly, we have planned this to minimize disruption to customers and make it as seamless as possible. Anthony mentioned that to maintain customers' banking continuity, we're primarily using unilateral variation. Payment continuity is also critical. The majority of customer payments will be automatically routed to the new accounts with no customer action required.
This particular migration will be undertaken in controlled stages with close banker engagement, consistent with the principles we have applied across other migrations. However, the full financial benefits are expected to be realized post-decommissioning, including the avoidance of a significant systems upgrade and lower operational complexity and therefore, reduced risk. Finally, turning to our major focus areas for the second half, which includes commencing the significant One Commercial Bank migration. Mortgage simplification is one of the largest collections of initiatives within UNITE. The work will reduce complexity by halving the number of mortgage products and systems and streamlining end-to-end processes. This year, our priority is to get ready activities within the simplify stage. Implementation and decommissioning will follow in the coming years. So far, we've completed the multi-offset initiative and harmonized mortgage products for consistency across elements such as terms and conditions.
In the second half, we'll get through more foundational work. This includes building the more complex mortgage structures into the target state master and migrating data for a single consistent view of property security. Given the scale and sequencing dependencies, the mortgages stream continues right through to the end of the program. We've rolled out the front end of Digital Banker, a one-stop platform now used by 6,000 bankers to serve our customers. It gives our bankers a complete single view of customer needs and interactions with no more jumping between screens and systems. Our focus for the next six months is transitioning the first service request onto Digital Banker, strengthening customer authentication controls, and expanding its sales capability for better customer interactions. For collections, we're moving consumer products from seven platforms to one called AssistNow.
This aims to provide faster and more flexible service to home loan and personal finance customers who need extra support. We've completed two migrations to AssistNow and plan to expand this to personal loans and regional brand credit cards during the second half of this year. Debit card simplification, as pointed out earlier, will address our complex set of debit card products and supporting platforms. We're simplifying this landscape by reducing the number of debit card products and consolidating card management into a single platform. Our focus for the next six months is completing the migration of Handycard to Debit Mastercard to enable the decommissioning of one legacy platform. The target state is a simpler product offer for customers, reduced operational complexity and lower technology risk, while improving our ability to manage and scale the platform over time.
The common theme here is that we're now well into execution and developing repeatable capabilities. We'll be clear on the milestones that matter, readiness, migration waves, and the decommissioning pathway that follows. As we build further momentum, you can expect to see more evidence of delivery, completed migrations, reduced complexity, measurable improvements and stability, and change capacity. I'm pleased with the progress we've made to date. UNITE is well structured, well governed, and progressing in line with our plans. We're confident in our ability to deliver the remaining stages and the benefits they support. Thank you for your time.
Thanks, Peter. Don't worry about clapping. We're only halfway. So we'll move to questions now. Anthony and Peter, if you'd join us up here on stage. While we've got plenty of time for questions, if you can limit it to one, and then we'll circle back. A reminder for those online, you can use the Vbox system to ask a question. We've got a couple of roving mics, so we might start up the front here with Andrew. If you can state your name and affiliation, especially for the benefit of those online, please.
Thank you, Justin. Andrew Triggs from JP Morgan. Anthony, you talked about AI in the context of impact assessment. Just interested to sort of flesh out just the use of AI in data cleaning and migration processes, and particularly the attitude, I guess, to the various regulators that you deal with around potential failure if Westpac takes a sort of AI-led, you know, best efforts but cost-efficient process. How does that sort of work with respect to regulators?
I invite Peter to make a few comments on how we're actually day to day using it. I think people need to take a step back. AI is a tool, and what we're doing is setting up with everyone in the company to use this tool, and we're finding that it could be particularly helpful tool to the way we execute UNITE. There's no abrogation of ownership or responsibility for the outcomes that we need in delivering UNITE.
AI is a tool that could help us do it faster. It could help us do it in a more efficient, and we think safer way. We have got to establish and prove that, A, to ourselves, B, to the governance that we have at Westpac, and then clearly to the regulator. That's why to sit here today and say we think it is actually really powerful and really effective and efficient. To then make a representation that we can pull everything forward and we can change everything that we do is not the right way to approach it. As I said, we've just simply got to use this tool, and we've got to demonstrate the outcomes, and we've got to bring everyone along in how we use that tool and the outcomes we're delivering.
Long answer to the question, which is, we are using it. Yes, we think it's really impactful. Yes, we think it's gonna have a lot of a big contribution to make. But we do have to bring the regulator along. We do have to bring our governance team along. We do have to bring the whole bank along on this one. That's the answer.
Thank you. Just to follow up, the second half, 26 milestones are listed. There's a long list there, but I think noted most are the foundational nature. Are any sort of individually or collectively, material to the 2027 cost outlook?
We've got our cost plans for 27. There's definitely some contribution that will come to what we're aspiring to achieve in 27 that comes from UNITE. The broader benefits from UNITE and its capacity to help us drive a lower cost to run and change of the bank. It starts to be really realized, frankly, at the second half of 28 going into 29. Yes, there's some contribution. Candidly, it's much more back-ended than that.
We'll go one other.
Is that fair?
Yeah.
Yeah.
Yeah, that's fair.
Okay.
Luca Ittimani from Bank of America. If I could just ask about some of these dates you've given, following up on Andrew's question there. The expected completion of the One Commercial Bank in December 2027, what sort of timeframe before we see the cost benefits from the decommissioning? How long does that take?
Yeah.
Yeah. As I said before, between the Asgard to Panorama migration and One Commercial Bank, that will take 65% of the accounts on CHS. Sorry, I don't know where you're located, Phil. You're around. Sorry. Apologies. We'll see more of the benefits again back into the 2028 once we are able to migrate the residual 35% off, which we're in the process of planning to, and then fully decommission CHS. Yeah.
That's Hogan, by the way. That's right. What's important to realize is that the decommissioning is where we start to really see the value. You've got to get everyone off the particular system, and we think we'll get many off very quickly because of the attraction of being on the Westpac stack and the offering we have. There will always be one or two you know cohorts that are actually gonna take a lot longer. We've just got that in our plan. That's why it's just important that the benefits are realized when a decommissioning is complete, and it's back-ended therefore in its nature.
The one supplement to that, sorry, which obviously isn't in the numbers that we do reference in the slide, was in order to continue to support Commercial Hogan, it would require a really significant upgrade to the tune of about AUD 400 million. Obviously that's avoided, but not within the numbers. There wasn't a kind of do nothing option here.
Yeah. Good morning. Matthew Wilson, Jarden. Just to be clear on the targets, the CTI target, the language seems to have changed from lower than peer average to close to or close the gap. The ROTE target doesn't appear in the presentation.
The goal is lower than peer average. Language,
Just language.
Thanks for bringing that, discipline to it, Matt. No, absolutely the focus is lower than peer average.
Just to follow up to the migration of the One Commercial Bank, as you move from BankSA, Bank of Melbourne, St. George, does my BSB and account number change?
Yes, it does. More importantly, the way we've designed it, and Peter, you're allowed to course-correct me on this, but the way we've designed it is that the customer does not have to do anything as a result.
Okay.
the work and the preparation, which is to make sure that the customer does not go through any or is not impeded, nor is challenged to do more than what they should otherwise have to, in migrating across from this platform to this platform. Same products, same range of services they get. We'd like to think actually that when they're on the target stack, there's even more we can do for them. That's the design and that's the outcome that we're delivering.
Great. Leave the mic there, Brian, and maybe just play pass the parcel, please.
Brian Johnson, MST. I just note that thing about the account number and the BSB, that's different to what was said historically. That said, if we look at it, you're talking a lot about consolidating the tech and consolidating the products. I'd just be interested, what does that mean for product flexibility? And also what does it mean? Do you actually need to have this multitude of brands? Product flexibility and what ultimately happens to the brands, and not just in retail banking, but in business banking.
Yeah. In terms of just, I wanna just answer brands. The whole program of UNITE is reduce the multitude of bank systems, consolidate onto one, so that we can realize the benefits of our scale in the marketplace by just doing things one way. We can and will have a multi-brand framework. It's all about how do I get everything done one way so that at last I have some, if you will, some benefit from the scale that we have in the marketplace. In terms of product flexibility, I suppose there's two things to that. Peter, again, please correct me if you disagree. We certainly have a proliferation of products across multiple bank systems, so we wanna get everything done one way on one system.
We're making sure that we therefore have the right product range to accommodate all of the current customers we have. Does that mean we don't introduce new products because new product is needed for new market opportunity? Well, the answer is we are always willing to look at those opportunities as we go forward, but it has to be done on the one target ledger that we've agreed, and it has to be done following certain one-way disciplines we've agreed for the company, so we don't have the mistakes of the past, which is a proliferation of products and processes which just add complexity and risk into the whole bank.
Anthony, sorry, could I just add to that? One of the problems at Westpac has been the fundamental conflict between some of the brands. For example, if you have a look in business banking, at one point, St. George bankers in business banking had higher limits than Westpac.
Yeah.
Higher risk tolerance. How do you ensure, like, this is about cleaning up the back, kind of getting the brands, but how do we ensure, or can you make a commitment that we won't see Westpac competing against itself? Like St. George.
So-
customers competing against Westpac business customers?
So-
That's been one of the big problems that Westpac has had.
Yeah. Well, thanks for that challenge or that question. That is absolutely what we're going after, Brian, which is we do things one way. That we don't have multitude of banks within the group, led by executives who may choose their own adventure. This is one way of doing things on the one target tech stack, and it is about them delivering the scale and the benefit of that. More importantly, it's not just the run and change cost that we do. It's just a safer bank to run if we do things one way. That's the mantra that underpins one way, and it's one policy, it's one product, it's one technology, it's one process by which we follow. That's the discipline we're trying to drive through the entire company.
If I can just comment on the product piece. We've done a couple of things. The first one was to do complete product and service mappings from the regional stack into the Westpac stack. As an example, we found that the Controlled Monies was a superior product on the regional stack, so we've deliberately uplifted. We think that 41 product offering is the right set of offering. The challenge we had with the 81 was there was about 414 variants underneath that, and that's a huge amount of complexity. Part of this is what's the right on-sale product set? Does it meet or beat the market? Then removing all that variation which drives all the operational complexity.
Jon?
Jon Mott from Barrenjoey. Got a question on a traffic light system. If you look from what was happening back in November to what's happening today. In November, you had 5 initiatives in red. It's now 1. Amber, 13-7. Green's gone from 20-38. It looks like all of a sudden the projects and the initiatives are going much, much better than you'd anticipated. Now, I understand you're marking your own homework here, and there is some element of that. Can you comment on why you've all of a sudden seen such a massive improvement on the only thing that we can actually measure on how you're performing?
Let me just comment on marking our own homework. It's fairly well governed. We shared the governance process with this. There's a board below that, a subgroup of the board, the exec piece. We obviously have our second line teams nested. We also have independent oversight from McKinsey. They have closed sessions with the board every quarter. I think we're incredibly well-governed, and I certainly don't feel like I'm marking my own homework. In terms of the transition, I think a couple of things. The first one was it was absolutely right that we had a federated approach to how we plan the initiatives on an end-to-end basis.
As we transition to execution and we centralize the teams and repackage that, we've been able to resynthesize and reorder the work, and we have a much clearer longer-term plan. I think that's what you're seeing play through.
Does it mean it's going better than you thought it was three months ago?
No, it doesn't mean it's going better. I think we have a much clearer view, and we've got a better execution cadence. What I would say is this is, as I said when I spoke, I fully expect that this all will have ups and downs as we go through the program. It's really complicated.
It will go up and down. Jon, I'll just say, my anxiety levels are not any lower than they were 3, 6, 9, 12 months ago. Maybe I might even venture the fact that there's a bit more green means I am more anxious. Because you're right, we've got to make sure that we don't trip here and we don't kid ourselves of where we're at. With all of the rigor we've put in place, with all the governance we've put in place, this has been what has emerged. Equally, I'm not forecasting this, but I can expect and am anticipating that there'll be more red and yellow as we go through the next 12 months. 'Cause it's, we're into it now. As we execute, things change, things evolve. Victor?
Victor German from Macquarie. Anthony, just wanted to follow up. I'm just down here.
Hey. Hey, Victor.
Just wanted to follow up on the earlier question relating to AI. You're 18 months in, two years into the project. I think initially people, including myself, were worried that these projects take longer and cost more. Now, having kind of gone through to where you are now.
With potential AI benefits, I understand it's early days. Do you think we should think of this as potential upside risk, or should we think of it as a minimizing downside risk?
Yeah. Oh, gee, oh please, Peter, you're allowed to critique me. I'd also invite you to speak to Andrew McMullan afterwards, the head of digital data AI across the bank. But I'd hate to tell you what to think, and so what it is though, it is showing us that there are things that we may be able to do faster, and we've certainly been able to prove to ourselves we can do things more consistently, and so there's a value in that. But I just—what's really important for me, what is really important for the executive team in Westpac is that we don't talk about these things, we don't talk about what we're gonna do, that we get them done, and we will then highlight to you what we've achieved.
I'd ask you to be patient with me on that. We would love to bring the project forward. We'd love to achieve a lot more. Most importantly, we've just got to get it done. The second stage is, can I get it done more cost effectively? Can I get it done a little bit faster? That is the exam question we're going after every day. We think AI, one of the tools that we have, is going to potentially contribute to that. Until we do it, we're doing it, until we've done it, I don't really want to talk about it.
Maybe I put another way. Assuming AI benefits do not come through, so all of the early test cases just, let's say-
Yeah.
They don't work. Do you still think you are able to get to the end of the project?
Yes. Yes.
in time frame?
No, no. Let's be clear. We, that is the thing that we will not let go of, is we must deliver this project. We must deliver it on time, we must deliver it on scope, and we must deliver it on budget. That is the rule. Everything is informed by that. If we can go faster, then wonderful.
Andrew?
Thanks. Andrew Lyons from Jefferies. Anthony, today you've reiterated the CTI target, as was noted earlier. Can you maybe just talk to what extent is that objective driven entirely by the UNITE program versus the need for broader productivity initiatives such as the Fit for Growth program that was announced at the last result? And maybe what costs should we expect, like incremental restructuring costs that might be needed for some of those broader productivity initiatives?
There's no way we can get to where we need to get to on the cost-to-income ratio without UNITE. Because it's not just a causal contribution to a lower cost of the company, it's an enabler. And unless we're doing everything one way on one target technology stack, following one process, using one policy, there's just no way we can get the cost to where we need to get to. It's both causal contribution to reduction in costs. It is enabler, but it also doesn't abrogate the fact that we still have to do other things and are doing other things. And that's something that particularly with Nathan's partnership and leadership, we're very focused on, is making sure that all of the other things we should be doing to get this company's costs to run to where we aim to is on track.
Fit for Growth, we're pleased with what we've set out to do, and we're delivering what we set out to do. The question for us is can we do more as a company outside UNITE? That is what we're currently working through as to whether we can do more, because I think we have to be honest with ourselves. We need to be relentlessly going after more, always and everywhere. That's what we're trying to do with the company.
Just a reminder to those online, if you would like to ask a question. We haven't got any online at the moment. Richard's got the mic.
Good morning, Rich Wiles, Morgan Stanley. Anthony, you said a few moments ago that most of the material benefits will emerge in the second half of 2028 and into FY 2029. Your comments during the presentation suggest that those material benefits are driven by system decommissioning. That's the big source is cost savings. I think you also said that you're about 13% away, 13% of the way through the decommissioning milestones. Is that a fair conclusion about how we should think of the realization of cost savings from UNITE?
Two aspects. Absolutely, in terms of UNITE's causal contribution, you know, literally the switching off things. Yes, it's much more back-ended. The fact that we're doing things one way on one technology stack is the unlock that allows us to go harder on other costs. Of course, we've got the other programs that we're going after across the group in terms of how do we run this company more efficiently, safely and more efficiently.
Brendan?
Brendan Sprouls from Goldman Sachs. Just a couple of questions on the retail migrations. Obviously not a lot of detail here today. Would it be fair to say that mortgages and retail deposits are really scheduled around that FY 2028, and that drives the peak of the investment in that project? I have a second question.
Yeah. It doesn't drive the peak. What's driving, if you look at what our spend for this year, next year and into 2028, it's really around the harmonization, some of the integration and the scaling of our target platforms. That's why you see that they come off in 2029 as decommissioning is a relatively small amount. You're right to say that the deposit and mortgages are scheduled towards the back end of 2028. The spend here is to get the systems ready.
Just my second question is just on the complexity of the implementation phase. I mean, a number of the ones that you've implemented to date are actually a relatively low number of customers in the tens of thousands. Obviously, when you get to these large retail integrations, you're talking about millions of customers. How much more complex is the number of customers in this sort of process?
Do you wanna have a go at that?
Yeah. It's the right observation. But that's why we've very deliberately approached it the way we have. Starting with private wealth, where we've built repeatable process, we've built the teams to support it. We understand the way the migration patterns need to be built, so that you build up to these things, not start it the other way. We think it's a really sensible, controlled way to approach this, so that we've got the muscle and we're sort of matched fit for it.
Yeah, that's certainly we learned a lot with the Private Bank. We've brought all that to bear in the context of One Commercial Bank. In preparing for One Commercial Bank, we learned so much, which is now being, if you will, built and invested in the context of making sure that when we do the larger migrations, we capture all those learnings. On the one hand, the complexity of the commercial customers and the private bank customers, with all of the different ways in which they deposit, whether it be through trust, whether it be corporate entities individually, et cetera, there's a huge amount of complexity there. Clearly it'll be a simpler customer complex. There'll be just a lot more accounts. You know, on either version it's complex, on either version it's simpler.
We are absolutely layering into the company what you need to do to be able to do this migration, this set of migrations safely.
Can we get the mic maybe into John there? Had a hand up there. Sorry. Yeah. Thanks, Andrew.
Good morning. John Sourbeer from UBS. Just wanted to check a few of the numbers with you this morning. Just in terms of the upfront costs related to the One Commercial Bank, the AUD 230 million of annual savings that you're calling out, and then the AUD 40 million per annum. How does that back into the upgrade costs avoided of AUD 400 million? That's the first question. I guess just related to that, the AUD 3 billion number that you provided, you know, why does that not reduce effectively by the AUD 400 million?
I think, Anthony, to what you were just talking about now, obviously as you've kind of gone through the private bank migration and you're obviously going through the commercial bank migration now, do you think there'll be an opportunity potentially, to also avoid some of the costs on the retail side of the business, right? I'm thinking about some of the smaller brands that you have. Obviously the big one is obviously St.George Bank, integrating those two businesses, but do you think you could find, you know, similar type of opportunity to what you found in the commercial bank, right, in terms of cost saves?
Will, do you wanna-
Yeah, let me start. The cost is AUD 230 million, the benefit's at 40. Really the 230 is partly obviously the cost to deliver that program, but also a lot of the repeatable processes and tooling, et cetera, built for future migrations. The 400 cost avoidance isn't within the 3.5 billion, and it's not captured in the benefit. It is a real number. We've chosen not to put those sort of cost avoidance numbers within the broader numbers that we communicate.
In terms of, John, I hope I'm answering your question accurately, and if not, I'll have you to discuss afterwards.
Sure.
In terms of the way I think about that question around, is there more savings made by, you know, other brands.
Yeah.
The brands aren't the cost. It's the bank systems, the multitude of bank systems. That is the cost and the complexity it introduces. Getting everything done one way on that target stack is the unlock. Whether you have all brands or more brands or less brands is somewhat secondary in terms of thinking, because that's not the cost here. That's not the complexity. It's multitude of systems and processes and technology and different policies. We're just getting all of that done one way. Of course we have that scale, and you can think more selectively around the true value and how that brand positions you in segment, region, et cetera.
Ed, I think you've got a mic there.
Yep. Thank you. Ed Henning from CLSA. Just going on to a bit bigger question. If you look at slide 32, you've got all your major projects there and the direct savings. Can you just clarify for us that the biggest effect is the cost savings from those direct projects? Or is there more beyond this that will come from UNITE? Or is it really just the savings you talked about before, where UNITE's enabling you to get other savings that come through the direct cost line at the bottom?
I'll make a comment, but please Peter's got done the work. Okay.
Yeah.
Point is, this sort of draws out the direct causal reduction in cost as a result. The fact that we then have other things that are enabled because we're doing things one way is outside of that. And then of course we have other initiatives on cost with all of that coming together to allow us to target that below peer average cost-to-income ratio. The point being is, we can still do what we've been doing, which is, you know, call it Fit for Growth initiatives. We'll always be going after that. That should be a never ending relentless exercise. We can't really break the back of getting the cost to run down until we get UNITE done, both causally and because of what it enables. That's the way to think about it.
Just to supplement, we've deliberately put in here just the direct benefits. But UNITE does enable the opportunity for further reduction in terms of operational complexity. Again, by reducing 70% of the products through the harmonization and standardization work, that obviously then provides the opportunity for business simplification, operational simplification, buys down risk, et cetera. It's an enabler. I think Anthony framed it well. We have to do UNITE to enable those other activities to happen. That goes to the question before about AI, about either doing it cheaper or hopefully doing it faster, is you need to do this, so hopefully AI makes you go faster as opposed to significantly cheaper and over the same time frame.
Yeah. Whether it's AI or other things, how do I go faster? You know, and hence, decisions around RAMS that make sense in the context of this group, that has enabled us to get a bit more done, or reduce the drain on getting things done in UNITE. That's helpful. Those are decisions we're just going to grind through, as we move forward.
Thank you.
We've got a couple of questions online. We might take those before we circle back to other questions. First question online, Mib Dang, "Thank you for organizing this update." Pleasure, Mib. "As UNITE is rather a large project, are there any initiatives or goals prior to Project UNITE that have had to be put on hold due to capacity?
Well, there's definitely lots of things we wanna do, and my job is to prioritize what needs to be done with the issue team I've got, make those choices. There is definitely things that we will do once UNITE's complete. Equally, there's so many things we cannot do unless UNITE is complete. I know people worry about this, but, you know, we are also advancing the company and making investment, for example, in Westpac One, BizEdge. These are really transformational uplift programs that really put us in a really privileged position in those two businesses. UNITE, however, is a critical priority for us to be able to be the company we wanna be in three to five years' time.
The only other thing I'd add is UNITE's part of that consolidation I talked about, you know, whether it's multi-offset for mortgages or, you know, Controlled Monies. They're uplifts, so they're investment in a better set of products. We've talked about Digital Banker, that's a better front end for our staff to use. There is also upside investment.
Our next online question's from Ravi Prakria, "Where do you anticipate the most customer friction as part of UNITE platform consolidations?
What's your judgment?
I think if we take the One Commercial Bank, I mean, we've got obviously we bank a lot with the customers. We expect, and we sort of learned through the private wealth migration, we need to work really closely with our customers around some of the new tools and capabilities that we're delivering to them. We think they're very intuitive, but they are a change. While we think it's a better proposition, a better set of services, you know, helping our customers use those to their full potential, I think is some work we've got to do.
Oh, look, the way I draw this one out, and it's sort of universal across all of what we're doing, customers don't want to have to do something different and don't want to have to do something extra. All the work we're doing is to make sure they don't have to do something different or extra. If we do ask them to do something extra, that we make sure it is a really superb and very, very easily navigated, you know, request. Where do I anticipate the most customer friction as part of UNITE platform consolidations? It is making sure the customer doesn't have to do something different or extra. If we ever do that is so easily done, so intuitive, so natural, actually, they don't feel like there's been an imposition on them.
That's why it's hard work, and that's why, you know, we're investing as we are, and that's why it is one of just, let's just get this right progressively through time rather than sort of a mad rush to do it.
We've got five minutes left, so we can circle back. Matt. Row two's popular again.
Thank you. Matt Wilson, Jarden. Just to follow up on John Sourbeer's question. When you embarked on this project, it was AUD 3 billion. We thought it was AUD 3.3 billion, and then Peter's just answered a question and said it's AUD 3.5 billion. Is that true? If we continue that run rate, we're looking at AUD 4 billion-AUD 5 billion probably at the end. How are you thinking about inflation, and is AUD 3.5 billion the correct number?
3.5 has been what we've had in front of people for a while now.
Maybe I'll take that on disclosure. Yeah. The math has been pretty clear. We can take that offline, Matt, that it has not changed for at least nine months in terms of that part. There will be some flex on that FY 2029, but it certainly hasn't changed in that period. The initial estimate when we were very early in the project was rougher, and that number was lower.
Yeah.
The inflation element?
Yeah, I mean.
'Cause you've been caught on nominal numbers before.
Yeah. I mean, absolutely, and that's sort of part of why we think there's lots of things that are helping us do it faster, more efficiently. Let's also recognize that we'll find things that are harder. We'll find services a bit more expensive. Until we're done, we should not be representing or positioning. I just hence the sort of caution. We just gotta execute this. We're very clear on what we need is the outcomes. We're very clear on the financial discipline we've set ourselves and how we execute this. There are things where we've gone better than we thought, and then there's things where we haven't gone as well as we'd hoped, and that's squaring out, and that's why we're here today to say we're on time, we're on budget, and we're on scope.
We just continue to just maintain that discipline. Even though there's lots of things where we might see unlocks or opportunities coming our way, we just simply have to stay the course.
Brian, you've got the mic.
Brian Johnson, MST. Just on slide 10, just to clarify something. This is the slide that shows the investment spend over time gapping up, and we know that 75% of it is expensed. What I'd like to clarify is that if you look at that slide, you can see in the smallest font imaginable, which I've noticed is an Australian bank unique thing, the important stuff is always in the smallest font. If you have a look at the total investment spend, AUD 2 billion per annum, 40% of it going into this, that figure, that implies that it goes to AUD 800 million, and there's probably a little stub after that of about, I don't know, AUD 400 million to get to the AUD 3.5 billion.
I just want to clarify that when we get to FY 2027, we get a declining investment spend of which 75% is expensed. Expenses go down in absolute dollars probably by about AUD 100 million. That is over and above the sequencing of the savings coming through. In FY 2027, is there a cost out mechanical cost out dynamic from this?
Maybe while you're thinking of that, Anthony. Your math is pretty good, Brian.
It's a skill, math.
Your math works on that?
Yeah.
Y-yes.
Well, it's your slide, Justin, so.
Yeah.
... my math works and your slide. Between us, that's a very powerful argument. There is actually a cost out dynamic in 2027.
We have to deliver.
Yeah. There is. Can I just go back to the question? Is there a cost out dynamic in 2027?
Well, the numbers put out. It's like you're looking for something here which is, yes, the intention is that there will be cost savings. Okay? We will have cost out. What I need to deliver is a total cost out across the whole company. Now, whether it's in UNITE or other parts of the company, is sort of like the next order question. We need to make sure we hit our cost targets and deliver the outcomes for, well, deliver on what we've said ourselves. Yes, your math adds up, you know, that's exactly what we have to deliver through the course of 2027.
Anthony, this is a really important point. That's over and above whether it works or not.
Yeah.
That's correct.
That's right, yeah. Bear in mind, the overall investment envelope is roughly AUD 2 billion.
Yeah.
It's non-UNITE that's implying non-UNITE spend is going up.
Yeah, but.
Yeah.
Just mechanically, Project UNITE. It's really an important point.
Yep.
I think Nathan Goonan's saying yes.
No, I think.
Just to clarify, there is a cost out argument in FY 2027 just from the declining investment spend, and then if we have a look at slide 32, all the incremental cost outs from that, it gets bigger again. Is that correct?
Hi to everyone. It's Nathan Goonan, CFO. The way I would think about this is, Brian, we're not saying precisely where we land in FY 2026 here for UNITE. There's an AUD 100 million range here between where we will. What I would expect to happen in 2027 is that we will have reasonably consistent investment spend in totality and reasonably steady state UNITE spend from where we land in 2026. Depending on where we land in 2026, between the AUD 100 million range, you could see, you know, a slight step up of that, and we'd have more to say about that as we get through the year. I think the important fact that we don't have is just, let's see where we land in 2026, and then we can have a conversation about 2027.
I'd expect UNITE to be relatively steady into FY 2027 and total investment spend to be pretty steady in FY 2027 as well.
We've got another online question. Morning, Phil Wensley. Can you give us some extra details on what has driven the small cost increase in the mortgage simplification program? That's shown on slide 32, please.
Yeah, absolutely. Obviously, the initiative has come down with the removal of the RAMS business and then we've had some additional work around both data and the collateral management.
Thanks, Peter. We'll probably have time for one more before we switch off. Jon, you've got the mic there.
Yeah, thanks. Jon Mott from Barrenjoey again. Just another question on this monitoring process. You've gone from numerous initiatives down to milestones. It looks like you're flying through it. Just over the last couple of months, implementations have gone from 13 to 19. But you've also said all the big projects haven't really started, especially in the Retail Bank. If you actually weighted it and said, "Okay, let's weight it based on the benefit or even the spend," where would you be?
In terms of how far.
Yeah, 'cause you're basically saying, "Look, we looked at the initiatives, but let's go away. We're now at milestones." Like, what's a milestone mean? Especially when some of them are very big and you haven't even started a lot of these things. So if you think about it from the actual benefit that you're getting, is there a different way of measuring it where we can actually look at it and say, "We can get it," and then we can hold Nathan to account in a couple of months and years on how it's actually coming through, rather than just tick a box on an initiative.
Yeah. I think, as I said, if we were to look at the 57 individuals and just report to you know, sort of here's where we think they are in terms of RAG, I think that that's one way of doing it. That's certainly the way we previously looked at it. We don't think it provides as much transparency as saying, "Here's the total number of milestones broken down in those individual initiatives, and here's how far through we are of each of those." I mean, happy to post this, have a conversation if you think there's a better way we should be demonstrating that, but
How many milestones are there? Like, you know, is it thousands of them? Like,
Approximately 2,074.
Okay.
Approximately.
Now, milestones will change. Some will come in, some will go out, some will be consolidated, but broadly that's what we got.
Yeah. Guys, it's a very large project with a whole layer of complexity, and as you execute, things will change. Happy though, but would appreciate any thoughts on further granularity, but it's also a project and things will move around. What we wanted to make sure is we're very honest with you about are we getting to where we've set ourselves as a goal to get to. We are making progress. I mean, I would like it to be a bit more than that, but we are making a progress, and we feel we're on time, on budget, and on track to deliver.
The discovery donut, there's a lot less spend there than, say, implement, which would be the largest spend bucket. Richard, you look really keen, so maybe we'll finish with you on the question. Make it a good one.
Yeah. Thank you. Rich Wiles, Morgan Stanley. Can you give us a list of the 57 initiatives, so we actually know what the whole program involves?
Yeah. We'll take that on notice and work with Justin.
Yeah. Right. Thank you. Great question.
Yeah. Thanks for joining everyone online and, come through with any further questions. Thank you very much.