Abbey National's £35m joint venture with EDS to service its
mortgages and personal loans heralds a new era of IT partnerships
in financial services, according to industry analysts.
Nick HuberThe agreement, announced earlier this week, will service almost
two million accounts and highlights a new trend in outsourcing.
Abbey National said it will make £9m in cost savings per annum
under the joint venture, which is due to start in May. Abbey
National customers will be able to manage their mortgages and loans
over the Internet and via digital television through the
service.
Over 1,700 Abbey employees will transfer to the joint venture in
May, including IT staff. Abbey National also plans to use the joint
venture as an administration service for other lenders.
Analysts said the deal indicated the rise of a new form of
outsourcing as companies strive to push down the cost of
administration by linking up with IT suppliers and services
companies.
Last year, high street banks Lloyds TSB and Barclays outsourced
their cheque processing to computer services company Unisys,
creating a jointly owned subsidiary (see box).
Alexander Drobvik, vice-president for e-business at IT analyst
firm Gartner Group, said, "Companies will look at business
processes where they are not world-class and get other companies to
operate them. They are also working with partners to find people in
the same market. It is outsourcing operating in a more intimate
way."
But the new breed of joint venture outsourcing - particularly if
it involves real-time Web services - raises the stakes for users if
a service goes wrong, Drobvik said.
nick.huber@rbi.co.uk
Joint ventures and alliances
Cheque processing (August 2000)
Barclays and Lloyds TSB outsource cheque processing to Unisys in
10-year joint venture. Unisys takes 51% stake in subsidiary
company, Intelligent Processing Solutions Limited (IPSL)
Mortgage applications (February 2000)
The UK's leading mortgage providers link their back office
systems over the Web to provide a mortgage acceptance in principle
within minutes. Based around a specially developed XML standard
Mortgage and loan processing (February 2001)
Abbey National and EDS announce "agreement in principle" for a
joint venture for servicing Abbey's mortgages and personal loans.
Abbey to invest £35m in first two years of venture. There are plans
to offer the system as a service to other lenders.