from the UK’s largest mutual banking group, Nationwide. The deal is
part of a wider £300 million technology-led transformation project
that the £180-billion-asset building society is hoping will beef up
its market share in savings and loans. Dan Jones
reports.
Nationwide Building Society, the UK’s largest mutual with around
£180 billion ($360 billion) in assets, has awarded a major systems
upgrade contract to Germany’s SAP, part of an ambitious £300
million transformation programme. The society, which has
capitalised on volatility in the UK market following the collapse
of Northern Rock, has made it clear it will compete head-on with UK
commercial players such as HSBC and Barclays, exploiting
technological advantages to acquire market share in its key savings
and loans business lines.
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Nationwide will be the first UK firm to take up the latest release
of SAP’s banking package – SAP for Banking – which was chosen ahead
of offerings from the likes of i-Flex, Fidelity and InfoSys. The
society is looking to gain ground in the banking sector following
recognition that it was, in the words of Darin Brumby, divisional
director, business systems transformation at Nationwide,
“increasingly losing the ability to meet the demands of the market
from a customer perspective”.
“There’s a suite of products being demanded by our members to give
them wider choice and we’re not able to meet the demand,” Brumby
told RBI, noting that the society would be able to
introduce youth accounts, premium accounts and other offerings as a
result of the packaged implementation provided by SAP.
SAP’s commitment to developing more core banking solutions in the
future was also a key factor in the agreement, according to
Nationwide. In September 2007 SAP announced an alliance with UK IT
vendor Misys which will see the two fintech firms collaborate on an
integrated universal banking solution for the global banking
industry.
Nationwide’s investment programme, known as Voyager, represents a
major overhaul of its business systems, with the society’s existing
Unisys platform and Fujitsu mainframe being replaced by
service-oriented architecture. “This is arguably the most important
undertaking that we’ve ever put on the table. It’s about what we
feel we need to do for the next 25 to 30 years,” Brumby
declared.
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By GlobalDataThe project, which will initially focus on current accounts before
redeveloping savings and mortgage products, involves what Brumby
calls a “paradigm shift” at Nationwide – the society’s banking
systems had always previously been developed internally.
Brumby admits that some of the current structures are “25 to 30
years old”, a feature far from exclusive to Nationwide. Separate
research recently published from consultancy Capgemini found that
almost all of the world’s top retail banks still use legacy systems
from the 1960s and 1970s within their domestic markets. The
consultancy, along with IBM, KPMG, IFB and others, has entered into
a strategic partnership with Nationwide as part of the Voyager
project.
“We’re facing up to the challenge that all the major banks are
starting to consider or will have to consider particularly in the
light of some of the dynamics going on in the market now. And it
isn’t something you can turn around overnight,” Brumby said.
The state of the current retail banking market may not make
immediate investment attractive to many institutions, but Brumby is
keen to emphasise that the credit crunch has affected neither the
rationale nor the start date of the project, pointing out that
Nationwide began a period of rigorous due diligence more than 24
months ago. “This is a very good time for us, being a very
prudently funded organisation without much weight on the wholesale
market.”
A slight “mover advantage” is likely to follow as a result, Brumby
states, but other benefits are seen as more significant.
In assessing the need for technological development, Nationwide’s
2007 merger with Portman Building Society provided the society with
an indication of the necessary future direction, says Brumby. “We
learned that one of our core disciplines we needed was very good
programme management capability – the ability to deal with large
scale change.” He added: “That’s an area where we had developing
competencies but we now recognise it as a key differentiator –
[Voyager will allow us to] do projects and large-scale programmes
that have interdependencies with each other.”
