Parliament's Finance and Expenditure Committee has grilled Kiwibank over the state and fitness of its core banking system after the bank wrote off a four-year, $90 million investment in SAP software last year.
"We do not believe we have received a satisfactory account of the reasons for the decision to discontinue the project," a committee report from last month said.
After the write-off, the only component of the CoreMod replacement project to go live and remain in use is an SAP payments engine, which has been operational since 2015.
Apart from that, Kiwibank is still reliant on Australian software called Ultracs, which it has used since it was founded in 2001.
A Kiwibank spokesman told Reseller News last month that Ultracs had received a number of upgrades over the last few years to ensure its stability and resilience.
In supplementary questions to parent company Kiwi Group Holding's annual review, the committee asked about next steps and the scope and time-frame of a review of the bank's transformation strategy.
Kiwi Group told the committee it was unable to provide an exact time-frame for a replacement core system.
"Consistent with the decision to close CoreMod, additional investment has been made to provide stability and support for the current core banking solution which allows Kiwibank time to fully explore and develop the outcomes emerging from the strategic review," the bank said.
Kiwi Group said the review includes a "diagnostic" of future trends in financial services, shifts in customer expectations, the changing regulatory, competitive and technology landscape, and how Kiwibank needs to evolve in the face of those shifts.
"Some components of the strategic design have concluded and we are now reviewing the technology options and approach to deliver the type of experience our customers are telling us they want," the bank said.
"We anticipate that this work will continue throughout the current financial year and into FY2019."
The committee also probed Kiwibank's ability to respond to the changing digital environment while remaining dependent its legacy core banking system.
Kiwibank said the core banking platform will "ultimately" need to be changed to meet long term customer needs and to grow the bank's capability in serving small- and medium-sized businesses.
"The current core IT system could place restrictions on achieving our long term vision - however the bigger risk would have been not to close the former upgrade programme," it said.
In a transcript of the committee's proceedings, Kiwi Group's chair Dr Susan Macken said the bank's options for replacing Ultracs were now better than four years ago when CoreMod started.
"Outsourcing, for example, a core banking system is a doable proposition today and wasn’t in 2013 - I’m not suggesting we’re going to do that, but those are some of the options available," she said.
"Our imperative is really to actually put in place a system which does enable us to respond and will give us incremental benefits along the journey, rather than waiting for a big bang when everything comes round in
five years’ time.
"So that is built into the design of the go-forward—the road map, if you like—as we speak."
Acting CEO Mark Stephen said he thought the decision to start the CoreMod program was based on "the understanding at the time".
"It was based on, you know, taking good advice done with the right intent, for the right reasons at the time," he said.
"What did transpire through the life of that program was that it was fundamentally far more complex to integrate and [Inaudible ]. So the time line became extended."
Stephen said over 50 per cent of Kiwibank’s sales and customers are now choosing to purchase the bank's products and services online, up from about 10 per cent four years ago.
"We believe we did have good oversight. We did have independent advice, but we have learnt it was a far more complex journey then what we initially recognised when we commenced that journey," he said.