News that Lloyds banking group is planning to migrate half a million customers to a fintech platform is a real attention grabber.
The fact that the fintech in question was set up by former Google executives to solve the riddle of replacing legacy systems makes it even more so. The quest for the Holy Grail of digital banking does after all
The FT has revealed that Lloyds Bank is hoping to migrate 500,000 customers from its Intelligent Finance division to a platform form Though Machine, a fintech set up by ex-Google executives. The news came quickly (a month) after Lloyds said it was exploring the use of Thought Machine. Lloyds has invested in the company and is a major shareholder, so its confidence in and understanding of what Thought Machine is not surprising.
But remember what happened last time a big traditional bank tried to move huge numbers if customers from legacy systems to a shiny new platform. T…S….B I say no more, apart from a reminder that TSB was actually using the legacy systems of non-other than Lloyds Banking Group at the time.
I don’t have to go into too much detail about TSBs migration because it is so widely publicised that even parents are discussing it at school pick up time. But if you want a refresh this article is a useful starting point. It was an epic among epic banking IT meltdowns. It has left a trail of devastation. Public inquiries, huge fines, and even bankers that lose bonuses in the future due to IT problems can blame TSB.
But the good news is that banks have learned another lesson. Taking customers from a hugely complex IT infrastructure has huge risks.
On this point I think it apt to demonstrate the complexity of banking systems at large banks like Lloyds Bank.
In fact if you read this story I wrote an article that featured a schematic diagram of banking IT. It depicts all the individual processing components and their interdependencies in a single mortgage system at a large, full-service retail bank. The boxes are typically applications, functions, databases and services, with the wires representing interfaces (read/write of data).
Click on this article link and you will find the diagram that you can expand. By the way this one is from Lloyds Bank, but probably quite a few years old. So perhaps the TSB disaster taught Lloyds more lessons than most. A kind of test-run with a competitor taking the risk. According to reports TSB actually turned down an offer of help from Lloyds Bank during the problems.