John McFall, chairman of the Treasury select committee,
called for the complete nationalisation of Lloyds TSB and Royal
Bank of Scotland aftershares in both banks
plummeted.
But the proposal could hold back the development of
innovative IT-based services of the companies currently
regarded as flag bearers for the use of IT in business.
Chris Skinner, CEO at financial services think-tank Balatro,
says although the government insists it will not interfere with the
business plans of banks under its control, their CIOs "can forget
it" when it comes to
spending on innovative IT.
"The case for doing any discretionary spending is going to be
completely eradicated. This would only leave maintenance spending,"
he says.
The government would attempt to rationalise RBS and Lloyds IT,
he says.
Outsourcing, server consolidation and
offshoring are likely strategies
But rival, private sector banks will have resources to spend on
IT to make themselves more competitive.
Ralph Silva, analyst at Towergroup, says, "The
nationalised banks' IT priorities will be to keep the lights
on, whereas other banks will be able to spend some proportion [of
their IT budget] on innovation"
HSBC, for example, is investing in IT at a time when other banks
are cutting back. The bank's
One HSBC strategy will receive £1.2bn funding this year.
The project has business benefits such as enabling customers to
deal with the bank through automated electronic services and
helping the business to expand into new regions without having to
build complex banking IT infrastructures from scratch.
But Peter Redshaw, analyst at Gartner, says that even
nationalised banks need to invest in technology if they are to
retain and win customers during the current difficult trading
conditions. "The nationalised banks may have to jump through more
hoops, but I think they will continue to spend," he says.
Technologies that
improve the customer's experience through automated services,
cannot be ignored.
Redshaw says nationalised banks will find it difficult to
justify outsourcing. "The biggest pressure will be on their freedom
to do outsourcing and offshoring." This is because the government
will not want
job losses in the UK.
The current economic turmoil has forced most banks to cut costs.
Those that have the luxury of being able to spend on IT to take the
business forward will be in a strong position in the upturn.
Candidates for nationalisation |
|---|
| RBS will report between £7bn and £8bn in losses related to its
day-to-day business in its annual results next month. But
write-offs related to its takeover of Dutch bank ABN AMRO are
expected to increase this figure. It now has a stock market value
of less than £4bn, down from as much as £78bn in 2007. Lloyds TSB
agreed to government-brokered takeover of troubled bank HBOS in a
deal worth . It lost a third of its value last week amid growing
fears that it will need more cash to survive the
recession. |
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