Commonwealth Bank Group and Telecom Corporation of New Zealand set industry benchmark with new contract

28 August 2000

The Commonwealth Bank Group has signed a groundbreaking A$500 million contract with Telecom Corporation of New Zealand (TCNZ) to deliver telecommunications services over the next five years.

The telecommunications contract will help expand the Commonwealth Bank Group's access and reach into new and existing markets and enable the Group to offer customers best value online financial services with the additional ability to provide 'one stop shop' telecommunication services. The Group expects to leverage this contract to provide customers with services and benefits they could not otherwise access.

Under the outsourcing arrangement, TCNZ Australia (TCNZA), a subsidiary of Telecom New Zealand, will utilise the expertise of AAPT, ComTech and EDS in the provision of telecommunication services.

TCNZA will streamline the Commonwealth Bank Group's existing telecommunications infrastructure into a single internet protocol network supporting a full range of integrated data, voice and video services.

Head of the Group's Technology, Operations and Property business unit, Mr Russell Scrimshaw, says, "This contract supports the Group's wider initiative to completely refresh our telecommunications infrastructure. TCNZA will replace our existing call centre platforms, data and voice networks and telephone exchanges with the latest technology as well as provide us with the ability to increase functionality across the Group.

"The contract will support the Group's online capability ensuring we are continuously at the forefront of the industry and so enable us to move swiftly towards the next wave of services," he said.

"This arrangement supports the Group's strategies of being a low cost provider by driving productivity and efficiency within the Group as well as providing our customers with more attractive and better value financial services," says Mr Scrimshaw.

Under a unique pricing arrangement the Group will only be required to pay for services used.

The agreement will be globally benchmarked to ensure price and service levels remain at the forefront for organisations of similar scale. The move to service-based billing will also support simplified, accurate reporting.

Service levels have been set and agreed, with measures in place to ensure service reaches levels previously not attained by the Group's previous carrier relationships.

Telecom Corporation of New Zealand will work closely with the Group's information technology partner EDS Australia who will continue to provide IT support to the Group in line with its 10-year agreement, begun in 1997.

The success of the Group's partnership with EDS Australia formed in October 1997, has resulted in information technology cost savings of more than 20% per year. It is expected that the arrangement with Telecom Corporation of New Zealand will achieve similar percentage annual and ongoing cost savings in the provision of telecommunication services.

Mr Scrimshaw said, "Telecom Corporation of New Zealand is part of an e-solutions alliance, involving Telecom New Zealand, EDS (NZ) and Microsoft NZ Ltd. Through our relationship and the TCNZA e-solutions group, the Group will have the opportunity to be first to market with new packages and services aimed at enhancing and growing our business and the businesses of our customers."

This strategic contract has the potential to radically change the telecommunication industry in Australia. Previously a no-risk industry with service provision on a cost plus basis, the industry now has a new benchmark with new parameters for business to demand carriers deliver competitive telecommunication services mapped to business requirements.

"TCNZ will streamline the Group's ATM (automatic teller machine) management requirements to include infrastructure, maintenance and network usage under the one arrangement, setting a new benchmark for the industry, in price and service scope," Mr Scrimshaw said.

"Previously the Group has outsourced each ATM requirement individually to multiple companies.

"In addition the contract has in-built technology refresh cycles for certain end user devices such as call centre telephone handsets and mobile phones. In addition TCNZ is incented to look for ways to provide new technology to deliver these services more efficiently".

Mr Scrimshaw said, "This contract preserves our existing alliances with EDS, Vodafone and Microsoft and opens up new opportunities for the Group with America OnLine (AOL), Lucent Technologies, Cisco and AAPT. This will enable us to deliver Applications Infrastructure Services to support online initiatives such as e-shopping, e-procurement and supply chain management".

"I am very pleased with the extensive evaluation we undertook over the past ten months, which has resulted in the appointment of Telecom Corporation of New Zealand as our telecommunication partner," Mr Scrimshaw said.

The Commonwealth Bank Group also announced that it has taken 5 per cent equity in Telecom Corporation New Zealand Australia plus an option to take up to 35 per cent in the next five years.

Telecom New Zealand Chief Executive Theresa Gattung said, "Telecom NZ's vision is to be the best performing online and communications company in Australasia.

"And to achieve our first major contract, under a unique partnering model, with a 'super corporate' that is leading the field in banking, online innovation, customer service and market growth, is clearly an excellent strategic marriage for TCNZ."

Ms Gattung said, "Under this agreement TCNZA will partner with the Commonwealth Bank Group and have an excellent opportunity to interface with the Group's existing alliance partners and package solutions to the Group's customer base."

"TCNZ Australia will provide a seamless service, with a single point of accountability to the Group, that will enable links and integration across the Commonwealth Bank Group's 1100 branches, around 4,000 agencies, 100,000 EFTPOS terminals and 9 million customers.

"Telecom NZ is proud to have secured this contract. We are delighted to welcome the Commonwealth Bank Group as an equity holder in TCNZ Australia and to work together to ensure our success," Ms Gattung said.

Mr Jim Duffey, EDS' Vice President, Information Solutions, Asia-Pacific South said, "EDS is proud to have been a strategic partner with the Commonwealth Bank for nearly three years. We welcome this opportunity to continue to grow the relationship by working in partnership with Telecom New Zealand to support the Group".