Nationwide will have completely renewed its front office systems in 2013 as part of its five-year £1bn IT transformation project that began in 2008.
Back in 2008, Nationwide embarked on a project to transform its technology after years of under-investment, typical in the financial services sector. The project sees Nationwide upgrade its datacentre, outsource IT for the first time, implement Microsoft technology in the front office and SAP at the back.
The financial services firm recently appointed a team of people to drive the programme through its next phase, which will see it migrate millions of accounts to new systems.
In 2008, Nationwide's board approved the project that set out to transform the company into a full service bank, make it a truly multi-channel operation, drive efficiency and service levels, as well as improve risk and information management.
This was agreed before the financial turmoil that began with the collapse of Lehman Brothers at the end of 2008. As a result, Nationwide suffered the same financial problems of other banks. It also had the challenge of integrating the struggling finance businesses it acquired during the turmoil - the Cheshire, Derbyshire and Dunfermline building societies had to be integrated into the existing infrastructure.
Tony Prestedge, COO at Nationwide, said the IT infrastructure had needed investment to meet customer expectations and to make it more efficient. "There had been under-investment in the business for a long time and we were in no different a place to any other bank during that period."
This under-investment had left its legacy. For example, the banking and savings business was using a Unisys platform that had been in situ for more than 20 years.
Prestedge said there was not enough automation when customers interacted with the bank and that manual intervention was required across all channels, whenever customers applied for a product.
Bringing Nationwide IT systems up to date
Back in 2008, Nationwide kicked the project off with plans to bring its IT infrastructure up to date. This began with its first ever outsourcing strategy, when it contracted BT and Computacenter for networking and desktop management services. It has also completed a £150m datacentre in Newbury, which harnesses the latest technologies such as server virtualisation. Its previous datacentre, also in Newbury, was over 30 years old and had no virtualisation.
It has since moved on to address its legacy applications. In January this year, Nationwide introduced a new mortgages origination platform. It has already put £7bn of new business through the system and has reduced the cost of originating a mortgage by between 35% and 40%. This platform will be introduced to telephone banking, internet banking and branches in the first quarter of 2012. Then the previous front-end mortgage system will be decommissioned.
Nationwide has also introduced a new internet banking platform based on Microsoft technology with IBM the systems integrator. It has already moved 300,000 accounts from its in-house platform and plans to migrate another 1.25 million by the end of next week. It will complete the migration of all accounts before December. "By the end of this month we will have introduced a new internet banking system and migrated 4.5 million customers to it," said Prestedge.
The internet banking platform will then be used in other channels. "We can extend this across all of our channels and this will happen over the next 24 months. When this is deployed in 2013 we will have completely renewed our front office." The company, which was the first bank to offer internet banking, previously had an entirely in-house developed internet banking platform. "It had added layers of in-house development and was complex as a result," said Prestedge.
In the back office the company is replacing the banking and savings platform from Unisys with SAP, while its existing Fujitsu back office mortgage system will remain for now because it is fit for purpose.
The first SAP release will be for current accounts. Prestedge said it is now in pilot and the company plans to go live for new products on the SAP platform between July and December 2012. "We will then role the platform out over a number of years so that by 2014 we will have all of mortgages and savings on the SAP platform. This will be about 20 million accounts."