Lloyds TSB has recruited a project manager with a track record
of integrating the IT systems of large banks to help it cut £1.5bn
by 2012, following its
takeover of HBOS.
Mark Fisher, currently overseeing the integration of
ABM Amro into the Royal Bank of Scotland (RBS), will take over
as director of group IT and operations to manage the project.
Fisher's difficult challenge is to
rationalise the IT platforms of the two banks while ensuring
the IT infrastructure meets the merged group's needs.
But Lloyds TSB is not alone. RBS faces similar challenges as it
completes its merger with ABM AMRO. Germany's Commerzbank and
Dresdner Bank are also joining forces, Barclays and Japan's Nomura
are merging with parts of Lehman Brothers, while the Bank of
America is swallowing Merrill Lynch.
Choosing which IT system should have precedence is a dilemma.
Both Lloyds and HBOS have advanced IT systems, each capable of
processing the business of the other bank. And the skills of each
IT department are among the best in the world.
Mark Fisherhas a proven track record in integrating banking IT
infrastructures. He was in charge of
NatWest's integration into RBS in March 2000, at the time
Britain's biggest ever bank merger.
The project required the consolidation of 400 business
processes, 22 billion customer records and 18 million accounts. It
saved £2.3bn, exceeding its target of £1.4bn savings.
One dilemma facing Fisher is to decide the merged banks'
outsourcing strategy. Lloyds TSB outsources a lot of its IT
compared to HBOS, but in the past Fisher has favoured keeping IT in
house.
Organising and merging the data from the two banks will be a
bigger challenge, says Justin Speake, CEO at Bloor Research. "The
challenge is less about the choice of platform and more about
getting all the data in the right place and securing it." The
number of systems with "unique foibles"makes this integration
difficult. A lot of customer data and business can be lost if
systems are stranded, he says.
Lloyds TSB is likely to look at all the IT systems that overlap
and make decisions about them depending on their flexibility,
scalability and security, says Rajeena Brar, banking analyst at
Pierre Audoin Consultants. "We know that a lot of banks are
replacing
legacy systems so whichever of the two banks is further forward
in addressing this will be a key factor."
The merging of two IT infrastructures is an opportunity to save
money and update technology for banks which have had legacy systems
for as long as 40 years. But deciding between the IT of two banks
is no mean feat because banks have spent heavily in systems and
skills.