It will be interesting to see how Clydesdale and Yorkshire Bank (CYBG) integrates Virgin Money from an IT perspective now that the £1.7bn takeover has been confirmed.
The acquisition will create the UK’s sixth largest bank and be in a position to take on the biggest high street banks. Its IT will be key to this.
Hugh Chater, managing director of the core bank of Virgin Money, said: “Today marks an historic milestone for CYBG and Virgin Money, creating the first true national competitor to the status quo in UK banking with a clear ambition to provide customers with the best service in the UK.”
CYBG has an interesting IT strategy as I recently discovered after interviewing the CIO, Fraser Ingram. After creating a digital banking platform known as iB, it created its B digital bank. The success of the latter has led it to migrate all its brands to the iB platform. This has given customers of Yorkshire and Clydesdale banks the same functionality.
Ingram told me: “B was the start of that, but now we don’t do things purely for B. We use B to test things quite a lot because it has a more tech-savvy customer base,” he added. “Anything that Clydesdale and Yorkshire have, B has, but B has some functionality that the other two don’t.”
It was always CYBG’s plan to migrate its traditional banking brands to the iB platform once it was proven through B. So Virgin will be next then?
But this is unlikely to be a Big Bang migration. Another TSB IT disaster is unlikely. Ingram told me that a lot of banks have gone after modernising core banking platforms. “But this is very high risk and does not really give you differentiation. To change the back end of a bank when you have got live customers, you have to be sure that what you get will work and will actually give you a point of differentiation.”
“The differentiation comes in how customers access their information and how the bank and customers use this information.”
I wrote recently about what the takeover could mean for Virgin Money’s planned digital bank, which the company had already invested £38m in. I was told by a source that this would be dropped if CYBG acquired Virgin. CYBG has a digital banking platform, known as iB, and a digital bank known as B. So what would be the point of developing another?