Alliance & Leicester banks on IT to level playing field with bigger rivals

After a flurry of high-profile contract signings, Alliance & Leicester has told Computer Weekly it has now embarked on a period of IT-driven transformation to strengthen its ability to roll out new online services and technologies to customers in the years ahead.

After a flurry of high-profile contract signings, Alliance & Leicester has told Computer Weekly it has now embarked on a period of IT-driven transformation to strengthen its ability to roll out new online services and technologies to customers in the years ahead.

The bank, which brands itself as an online operation backed by high-street branches, is investing heavily to develop retail e-banking as it bids to keep pace with larger rivals that are investing heavily in IT.

Among the services that Alliance & Leicester wants to offer in the future is real-time processing of
e-transactions, which is being encouraged by the Office of Fair Trading after years of customer complaints that online transactions are processed too slowly.

Alliance & Leicester now has two major IT projects under way that should, in time, make possible some fundamental changes to its operations. It is implementing a core banking platform called Alnova from systems integrator Accenture, and migrating its network to a BT-owned voice over IP network.

Both the new deals have been approved by Ian Buchanan, who took over as Alliance & Leicester’s chief information officer nearly a year ago, after five years as CIO of investment bank Nomura.

“I have come in to completely overhaul our technology strategy in the context of an evolving business strategy,” Buchanan told
Computer Weekly.

He said the IT function was working towards the same target as the rest of business: namely, to improve the bank’s cost/income ratio. He said the Accenture and BT deals would drive cost savings, but also had to enable the business to increase its income.

“As a retail bank our competitive edge is having the best rates. Because of that, our cost/income ratio needs to become more and more competitive. For instance, our Premier Direct online-only account has been successful because we have not had to add people to our contact centres to offer the account.”

Buchanan said that the deals with BT and Accenture would let Alliance & Leicester focus on IT developments that differentiated it from others, even from larger rivals.

All the systems, which will continue to be developed internally, are being standardised on a service oriented architecture (SOA) from IBM Websphere. The bank chose Websphere at the same time as it
selected Alnova as its core system so that its internal development work could be integrated with the new platform.

Some SOA pilots will go live in the new year, including a system to process mortgage applications. This will coincide with the start of the internal roll-out of Alnova – a project that should take up much of next year – but the platform will not host the bank’s products until 2008. The first products to move to Alnova will be lending, current accounts and savings accounts.

When finished, the platform is designed to give the bank a single view of its customers. At the moment, Alliance & Leicester customers have a separate account number for each product they hold with the bank. As a result, customer service has to be arranged by product rather than by customer.

Alliance & Leicester currently runs a mix of proprietary banking systems, some of which were brought into the business when it acquired Girobank from the Post Office in the 1990s. It expects to be decommissioning some of these legacy systems within two years.

Perhaps most importantly of all, Alnova will let Alliance & Leicester introduce new services and products to its website more speedily.

Buchanan said, “We have quite a complicated way of delivering services. We wrapped applications around our legacy platforms when we launched internet banking. But, when you have systems that are strung together like this, putting change through them is quite hard.

“The bottom line is that we need to increase speed and that is not going to happen just by adding to the infrastructure. That is why I decided to go with replatforming.”

About 150 Accenture personnel are working alongside a similar number of Alliance & Leicester IT staff on implementing Alnova. The platform is expected to be finished by the end of 2008 – about a year after most of the systems have been migrated onto BT’s VoIP network.

Buchanan said, “This whole programme is an IT-enabled business transformation project.”

Alliance & Leicester’s IT systems will not win the competition for new customers with the bank’s rivals on its own, but if the business transformation programmes are successful they should help it compete head to head with the big banks.

www.computerweekly.com/219305

 

Comment on this article: computer.weekly@rbi.co.uk

This was last published in November 2006

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