Standard Bank Group’s total IT spending, including staff costs, topped R10-billion in the first six months of 2022 as the financial services giant ramped up its cloud migration project.
IT spend measured as an operating expense – including licences, maintenance and related costs – was R5.13-billion, an increase of 7% over the R4.81-billion recorded in the same six-month period in 2021, the group disclosed in its interim results, published on Friday.
If that run rate continues, IT operating expenses will top R10-billion for the full year, beating last year’s R9.74-billion.
Total “IT function” spend, including staff costs and amortisation of intangible assets, was R10.13-billion for the six-month period, from R9.71-billion previously, an increase of 4%. This suggests full-year IT function spend could top R20-billion for the year to end-December 2022.
For the six months, staff costs rose by 5% to R2.37-billion (R2.27-billion before), while amortisation of intangibles was flat at R1.3-billion. Depreciation and other expenses declined by 2% to R1.33-billion.
The bank’s overall staffing costs, including in IT, rose due to salary increases and an increase in skilled employees. This was partly offset by a decline in headcount due to natural attrition.
Read: Standard Bank is now almost entirely cashless
Standard Bank said IT cost growth was driven specifically by:
- Continued cloud migration spend to enhance business agility and system resilienc, although there was reduced capitalisation as signature IT programmes wound down.
- Investment in software to allow employees to service clients better, to enhance infrastructure resilience, and to improve client relationship management platforms and digital capabilities for users.
This spending was partially offset by savings driven by “conscious efforts to contain third-party spend and the decommissioning of legacy systems”.
IT outages
Despite the increased IT spending, the period was marred by several serious IT outages that caused embarrassment for Standard Bank. These outages led to the termination of employment of IT chief Alpheus Mangale in June.
The bank said on 3 June that “as the senior executive responsible for the stability of our IT system”, Mangale had resigned from the group “with immediate effect”.
In a statement at the time, Standard Bank said the series of outages had a “negative impact on our clients and our employees”.
On 24 May, Standard Bank South Africa CEO Lungisa Fuzile apologised profusely during a media conference for the bank’s downtime earlier in that month, which prevented clients from transacting for an extended period. – © 2022 NewsCentral Media
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