NAB implementing new security, risk models as IT overhaul continues

New security models and a completely new risk-assessment algorithm are playing a core role in the National Australia Bank's ongoing transformation, the head of the company's 10,000-strong Enterprise Services & Transformation (EST) division has confirmed in a recent update on the four-year-old effort's progress.

Security has always been a priority within the financial-services sector, but had presented very different challenges as the breakneck adoption of mobile banking amongst the bank's customer base – mobile-banking logins grew 53 percent and mobile BPAY transfers 83 percent year on year, for example – forced an even tighter focus on information security.

“We continue to invest in our technology security capabilities, with constant data mining and data analytics around seeing patterns in transactions,” EST division head Lisa Gray explained.

“We've been using new applications to be able to interrogate incredible amounts of data to be able to detect these patterns, and then constantly looking at the devices themselves. We've also been working with network providers to be able to ensure that users' devices and identities are as well protected as possible.”

NAB reallocated around 40 percent of all of its staff to the EST division in order to support the transformation agenda, which involves a massive IT investment that includes the NAB's 'NextGen' IT platform and associated security infrastructure.

A major deliverable of the project has been a private-cloud infrastructure, which is being ramped up to support a range of other banking systems throughout the remainder of the massive systems overhaul.

“We're continuing to build on the reliability and robustness of our mainframes and services,” Gray said. “This means, for example, batches that might have taken 10 hours can now run in two hours. And that's all about reliability and accessibility for customers: some of what we're putting in place in private clouds will be able to give us significantly more computing power.”

Movement of large volumes of non-confidential bank information to the Amazon Web Services public cloud has allowed its private cloud to be focused on higher-security protections for personal information: “this enables our data centre to be focused on more sensitive customer and private data,” Gray said, noting the release of a new application programming interface that is carefully managing external access to the bank's Oracle-based new infrastructure.

“It's allowing us to get the best of both worlds, using Oracle and other major providers to get a very strong core banking capability or other elements,” Gray said. “This API layer will enable us to attach to that and use more niche capabilities. This gives us the best of robustness, but agility around niche applications as well.”

Another key element has been the implementation of a new credit risk engine, which underscores the bank's credit risk calculations and allows it to manage risk “in quite a fundamentally different way,” Gray said. “It provides more insight and faster decision making, enabling us to grow the business a lot more rapidly.”

The new risk platform will also support the movement of new products from the Ubank, the NAB-supported online-only bank, across its broader product set. Direct banking capabilities – including those currently only available to Ubank customers as well as those to be rolled out in the future – will be rolled onto the NAB platform late in 2014 and into 2015.

Fully four million customers will be migrated onto the new platform in the next two to three years, Gray said, delivering new opportunities to keep up with regulatory change but also delivering the levels of security necessary to support the increasingly digital mobile and online banking experience.

“We're very well placed to be able to bring a much more highly digitised experience to all of our customers,” Gray said, noting that increasing regulatory and security requirements had made it untenable to simply “put a Band-Aid over the top of legacy systems”.

“The more change you do, you have to make more and more change to the multitude of systems you have behind the scenes,” she explained. “At some point it's either too costly, or you can't meet regulatory guidelines, or it just becomes more complex.”

Ultimately, security and governance protections need to be extended across all of the bank's new channels to seamlessly support the NAB's future business model, Gray said.

“We're looking for customer to be able to enter on one channel and exit on another,” she explained. “We think that's just critical to being more successful in a mobile and digitised world.”

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