IBS Journal July – August 2015
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The Core Banking Systems Market Dynamics Report 2014
As Spain-based Banco Sabadell is moving towards taking ownership of the UK’s major high-street bank, TSB, questions arise regarding the future of TSB’s core banking soft- ware. At present, the bank is running off its former sister bank, Lloyds (the two entities were operating together as Lloyds TSB until September 2013), which is costing TSB an eye-watering £100 million a year. This figure is expected to rise to £200 million. TSB has a network of 630 branches across the UK and five operations centres, 4.6 million
customers, revenues of £900 million (2014) and 8500 staff. Its head office is in Edinburgh. Sabadell has allocated three years and £450 million to the technology project at
TSB, it is understood, with many predicting that it will bring its own core software to the UK bank (similar to what another Spanish heavyweight, Santander, did a few years back when it acquired Alliance & Leicester and Bradford & Bingley). Sabadell’s domestic system stems from Accenture’s Alnova. Alnova has one site in the UK at present, Bank of Ireland, although an initiative to replace it now is being mooted there (see p12). Meanwhile, Sabadell’s existing operation in the UK – a small London-based bank
that specialises in corporate banking services – has been running the CapitalBanker core system from France-based Capital Banking Solutions since 2011.
One of the South African banking heavyweights, Nedbank, is understood to be gearing up for a major core banking software renovation. The project will focus on the group’s domestic operations. Its network of subsidiaries outside South Africa is rolling out the Flexcube core banking system from Oracle FSS, as part of a major partnership agree- ment with another pan-African user of Flexcube, Ecobank. Nedbank also holds a 20 per cent stake in Ecobank (purchased last October for $493 million). It is understood that Nedbank has allocated nearly $1 billion for the domestic project, and
is now working on a list of potential suppliers. SAP, Oracle FSS and Infosys are believed to the main candidates. It should be noted that this is not the first time the bank has been rumoured to be looking for a new core system: in 2013, the bank was reported to be in system selection mode, choosing between Temenos, TCS and Oracle FSS, but no decision came to pass.
Hats off to RBS (not a phrase you will hear too often). However, given the latest in a se- quence of high-profile computer outages the previous week, it was brave to put Kevin Hanley, director of design, services (whatever that means), in front of a roomful of an- alysts and press at SAP’s Financial Services Forum in London. Sure enough, Hanley had something of a rocky ride, as he struggled in vain to keep the session on his preferred topic of innovation. Finally cracking to the barrage of questions, he admitted that the bank was likely to wrap and reduce reliance on its creaking legacy core systems, rather than replacing, working with ‘providers like SAP’. There will be significant spending over three to five years but he reiterated the corporate messages from the previous week that it is impossible to guarantee fault-free technology. The SAP event as a whole had a rather odd air, with the bullish statements from the senior speakers somewhat at odds with the recent push to reduce headcount by offer- ing redundancy to those with at least ten years of service (and granted to one or two of those with less, who have asked). Meanwhile, where was Hana, the in-memory platform that until recently was being touted by SAP as the answer to all of the world’s problems but, in financial services at least, has had an underwhelming reception? It barely had a mention over the two-day event, as opposed to featuring in every other sentence only a year or so ago and also at SAP’s main annual gathering, Sapphire, earlier this year.
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