Loughborough Building Society is poised to transfer the management, maintenance and technical support for all of its core banking systems to Skipton Building Society, after signing an outsourcing deal with Skipton's IT bureau Mutual One.
Under the deal, IT responsibility for Loughborough's mortgage and investment business, finance ledger and branch cashiering systems will all pass to Mutual One. It will also replace all of the society's desktops across its three branches and head office when its takeover of Loughborough's IT function is completed next spring.
Derek Bond, general manager for IT at Skipton, said this was the first time Mutual One had signed a complete IT management contract. The agreement meant that the IT bureau now accounted for about 15% of Skipton's pre-tax profits, he added.
"In the past, clients would procure and refresh PCs and have their own network and routers, but with this deal we do everything for Loughborough. They do not have to worry about the IT helpdesk, the refresh cycle or lots of other associated responsibilities."
In terms of IT, only Loughborough's telephony system and the management of its website is set to remain under the society's long-term control.
Stephen Peete, chief executive of Loughborough, said the decision to outsource its IT function was primarily driven by the risk involved in keeping IT in-house.
"As the CEO of a building society, I do not enjoy running an IT business - and with our internal IT department, we were running an IT business. It concerned me how vulnerable the society was to a loss of knowledge.
"As technology has become more integral to our business and more complicated, the board decided that the risk was not sustainable."
Skipton has offered IT bureau operations for 12 years. It developed its integrated core banking system using Jade, an object-oriented software language.
With the IT overhaul, Loughborough will become a Microsoft and Jade shop. Its desktops will run on Windows XP, backed up by a Microsoft datacentre, and all of the core banking systems will run on Jade. Its servers are all Unisys ES7000s.