Britannia building society and Co-operative Financial Services
(CFS) could be the next UK financial services firms to integrate
their systems.
Britannia, a savings and mortgage company, and CFS, a personal
and business banking and insurance specialist, are
in talks on future co-operation, with a view to merging.
Although the businesses have complementary specialisations, a
merger would require significant IT planning and integration to
result in cost savings and greater cross-selling of products
between the organisations, said industry analysts.
"Talks are at an early stage and no decisions have been taken,
so it is too soon to talk about what changes might arise for our
customers and employees. We can say that we remain committed to our
Leek, Staffordshire, base, our extensive branch network and our
strong Britannia brand," said Britannia CEO Neville Richardson.
Britannia said the talks were not taking place as a result of
the current turmoil in the sector. Unlike government brokered
takeovers such as
Lloyds TSB's planned acquisition of HBOS or
Santander's takeover of Bradford & Bingley, Richardson said
the companies do not need to merge.
PJ Giammarino, CEO at think-tank JWG IT, said the companies will
have to move to a common IT platform to achieve the benefits of a
merger.
"The bigger an organisation gets in capacity, the more important
it is that applications, data and technology infrastructures are
aligned," said Giammarino.
The key to
integrating legacy systems to make the most of a merger of two
businesses is to use more hosted applications in financial
services, said supplier Fidelity Information Services.
Ian Benn, managing director payment services at Fidelity
Information Services, which gains half of its revenue from hosting
and the other half from traditional software licensing, said
mergers are often the catalyst of hosted applications being
used.
"If you have situations where two firms come together you have
to make a choice which applications are best, but there is also a
third way," he added.