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Looming NPP offers banks the opportunity to simplify

The expected October completion date for the New Payments Platform (NPP) is looming. The NPP, which will facilitate real time payments between financial institutions and customers’ accounts via a mobile device or online, represents a major milestone in Australian banking technology.

While the NPP will bring great benefits to consumers, its introduction is much more than new technology and will require significant internal change for Australian banks. As such, it also offers a unique opportunity to streamline operations and improve customer service.  

Australian banks generally have a good track record for introducing technological change. However, as we have seen in similar situations when major change occurs, banks often fail to use the opportunity to make broader improvements to operations. While desirable for the bank as a whole, operational improvements are not usually seen as critical for success in these instances.

A recent article by McKinsey regarding sustainable compliance highlighted that tighter regulatory compliance has resulted in many more staff being in compliance, creating greater overheads in the business. Further, this has resulted in “an unwieldy system of overlapping controls that is difficult to automate and does not address the true causes of risk”. Whether a new compliance change, new technology or updated processes, simply adding to the increasingly complex business operating model creates greater inefficiencies.

By not addressing the growing complexity within their organisations, banks leave themselves vulnerable to new players and fintechs who have lower operational costs, do not have the complexity of legacy systems, and are able to operate more efficiently and effectively.


They also leave themselves open to increased customer churn. The NPP will allow customers’ bank accounts to become more portable with accounts being assigned to phone numbers and email addresses. To combat this, banks will need to focus on providing better customer service to retain clients. If they don’t step up with increased services, the competition will erode revenue and profits.

Our large banks operate in a very complex environment that includes layers of IT systems, many types of products, different processes, various customer segments and an increasingly demanding compliance environment. As technology has accelerated over the past decade, bringing with it new systems and improvements, that, while beneficial for the customer, only increases the complexity of operations for banks.

What’s more, is that different areas within large banks are treated individually when it comes to operations which means there is very little over-arching understanding of how change, such as the NPP, will affect the bank as a whole.

The NPP is an opportunity where a system can be integrated into the banking operating model or bolted on as an ugly, unmanageable extension. If undertaken well, operations will be more seamless, resulting in better customer service and competitiveness. If undertaken as an independent project, the introduction of the NPP could increase costs, add to IT system complexity, result in inconsistent practices and erode market share.

The NPP cannot be ignored. Its introduction will require all banks to respond with new systems to handle the transactions, for instance, allow the allocation of phone numbers and email address to accounts. It will most likely be adopted quickly in the market as the approach has proven popular in other countries.


Like any change, its success will depend on how well it is integrated. Operations will change, systems will change and services will require modification. Complexity is so great that the NPP, like many other changes, cannot be handled in isolation.

Banks will need to understand how the NPP impacts their organisation from strategy to execution. This requires the appropriate tools. These are not a series of documents that are disconnected. Rather, what’s required is a single set of comprehensive documentation that is driven by an operating model which guides operations, compliance and supports better decisions.

This operating model will then allow change to be simulated prior to implementation. The future design of the organisation can be created in a fraction of the time of the actual implementation. This can be further refined and the optimal model developed. This is then the blueprint of change and can guide the various elements of change, providing updated, accurate and relevant documentation.

As the deadline for the NPP draws closer, our banks should be not only focusing on its implementation but also using the opportunity to simplify operations so they can better compete in an intensifying market.

Looming NPP offers banks the opportunity to simplify
Bruce Nixon, New Payments Platform, NPP, real time payments, Australian banking technology

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