Bank merger plans questioned

Nick Huber

The merger between Barclays Bank and the Woolwich will stretch the scalability of the Woolwich's online banking services,...

Nick Huber

The merger between Barclays Bank and the Woolwich will stretch the scalability of the Woolwich's online banking services, consultants warned this week.

Barclays' £5.4bn offer for the Woolwich was recommended by the Woolwich board last week and has been broadly welcomed by IT analysts. They have stressed that the shared back-office systems used between the two groups, such as IBM mainframes, will help the three-year integration plan.

But consultants have already raised concerns over the volume of customers that the Woolwich's online banking and mortgage service, Open Plan, can handle.

Open Plan currently has about 290,000 customers, compared to more than a million customers for Barclays' online banking service.

"One of the issues has got to be scalability," said one banking industry consultant. "The Woolwich appears to be very robust but you're looking at a customer base of 16 million. It will have to a very well architected system."

And Barclays will also have to integrate IT networks with the Woolwich only months after it announced its own three-year IT overhaul covering e-business, outsourcing and customer relationship management systems.

According to an internal Barclays strategy document (Computer Weekly, 13 July) this change is driven by the fear that Barclays has missed first-mover advantage in the e-banking and e-business sector.

The merger document agreed by Barclays and the Woolwich says it will combine back-office processing and call centres to create a "centre of excellence" for each key back office activity. But it remains unclear whether it will feed Open Plan's front-end system into its own back-office system or run it from the Woolwich's existing back office.

And the target for integrating the IT systems within three years appears optimistic in comparison with previous banking industry mergers. Lloyds and TSB will finally integrate their IT systems by the end of this year, five years after the merger.

Both Barclays and the Woolwich refused to comment on their plans for IT integration.

Barclays' suppliers include Oracle and Andersen Consulting, which will help providing e-procurement services.

The bank runs IBM S/390 mainframes with IMS and DB2 applications.

Key goals of Barclays' internal IT shake-up include rolling out thin-client technology to 3,000 branches this year. Dell PCs will be used as dumb terminals, with a mixture of IBM, Sun and HP servers.

Barclays will also integrate legacy systems into its branch network, Internet banking and proposed wireless application protocol and telephone banking services.

Using Java middleware running on an IBM Websphere application server and Oracle database

Woolwich suppliers

Include Microsoft, Intel, and Unisys.

IBM mainframes, databases and operating systems

Barclays/Woolwich merger

  • Predicted IT savings of £10m out of total savings of £150m, by the end of the third year

  • Merged Barclays and Woolwich group will have 16 million retail customers and will be one of the largest financial services groups in the UK

  • Merged group will have 1.5 million online customers

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