IBS Journal September 2015
Co-operative Bank struggling to solve endemic IT problems as losses treble in H1 2015
The Co-operative Bank has labelled its existing IT infrastructure as ‘unsuitable’ and ‘inherently fragile’, highlighting an urgent need to overhaul its IT platform. The UK bank has made the statement
following the news that its losses almost tre- bled during the first half of 2015, from £77 million to £204 million. The Co-operative’s IT platform has taken the brunt of the blame for the losses – its disastrous attempt to replace its legacy systems with Infosys’ Fina- cle eventually writing off £349 million. According to the bank, many of its
business, operational, reporting and finan- cial processes need regular manual inter- vention, increasing the risk of errors in data. Process improvements, it adds, are taking much longer than expected with ‘signifi- cant work’ needed to embed access and controls into the management of financial and customer data. An independent review carried out
by Sir Christopher Kelly in April 2014 criti- cised the bank’s IT renovation. In a scathing 13-page report, Kelly cited (rather prophet- ically) an underestimation of the amount of work needed, a lack of working relation- ships between key figures and the scale of the concerns people were raising about the project as major worries for the future. The Co-operative has since entered into
an outsourcing contract with IBM, handed over its mortgage processing operations to Capita and spent £101.9 million in the last six months on other rescue projects. The bank’s separation from the Co-
operative Group could also be ‘more cost- ly than currently contemplated’ while a number of its branches could be looking at shutdowns, despite the bank halving its branch network since 2013. Despite the problems facing the
Co-operative, its CEO Niall Booker, who was brought from HSBC in 2013 to rescue the situation, points to steady retail account numbers and digital uptake as a light at the end of the tunnel. However, Booker is not pulling his
punches: ‘We won’t be profitable in 2015 or 2016,’ he adds. ‘We are not giving guidance any further than that.’ Meanwhile, Finacle, the system the Co-op had so disastrously tried to imple-
12 © IBS Intelligence 2015
ment, has been heading for the cloud. Infosys recently signed deals with both Verizon and Microsoft to host and distrib- ute the platform. In the UK, Finacle has a number of
sites, but none with domestic institutions. Its users are small UK branches/ subsidiaries of international banking groups, such as Union Bank of India and Axis Bank.
Alex Hamilton
IN BRIEF
The Canadian Payments Association (CPA) has tapped up consulting firm McKinsey and sought input on its ISO 20022 standards to support the ongoing modernisation of its core payments infrastructure. The CPA, in consultation with members and stakeholders, is hoping to receive detailed analysis from McKinsey to aid the renewal of Canada’s payments clearing and settlement systems. Among the key goals for the project are the introduction of a modern real-time payments system – with the CPA looking for input on how to set the ISO 20022 standard at its core. CEO of the CPA, Gerry Gaetz, believes that the standard will form ‘an integral
part’ of the modernisation. Changing user needs, he adds, along with new tech- nology, has piled too much pressure on Canada’s legacy systems. All Canadian payment system stakeholders have been invited to give feed-
back and comment on the progress the CPA is making, while some are expected to be interviewed directly by McKinsey. There were whisperings at last year’s Sibos event that the CPA were gearing
up to roll out a new infrastructure and it seems those predictions were accurate. With the groundwork having already been laid by Canada’s adoption of the ISO 20022 standard, the shift to a modernised payments structure might not be too long in the making. —Alex Hamilton
www.ibsintelligence.com
ibs news
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56
