Kiwibank IT blow-out could exceed $40m
Kiwibank may need two extra years to complete a project to replace its core banking systems, statements from the bank suggest.
Majority owner NZ Post last year earmarked $40 million for possible cost overruns installing software supplied by German giant SAP at the bank.
Kiwibank has since issued a fresh warning in a quarterly disclosure document about the project, dubbed CoreMod, and won't say $40m will definitely cover the extra costs.
"This is a significant and complex change programme which is taking longer than anticipated and will involve a higher level of investment and operating risk over the next two to three years," the bank said in a one-line statement.
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Kiwibank had originally forecast in 2014 that it would spend in the region of $100 million on CoreMod over "three to four years" – implying the goal had been to wrap up the project by this year or next.
But the disclosure document implies the project may drag on until 2020.
Spokesman Bruce Thompson said Kiwibank would not comment further at the moment, because of "commercial sensitivity".
"We are not going to give out piecemeal information."
The $40m contingency was a matter of record, he said.
"As to whether it will all be used, how much will be used, or even if more will be required – I am not able to speak."
Chief executive Paul Brock might provide more information at a briefing next month, he said.
Thompson acknowledged the bank had faced criticism as soon as it selected software from SAP for the project, which he indicated was unfair.
"Right from the 'word go' we had people saying we had chosen the wrong system, and a lot of that was vested interest," he said.