Britannia building society and Co-operative Financial Services (CFS) could be the next UK financial services firms to integrate their systems.
Britannia, a savings and mortgage company, and CFS, a personal and business banking and insurance specialist, are in talks on future co-operation, with a view to merging.
Although the businesses have complementary specialisations, a merger would require significant IT planning and integration to result in cost savings and greater cross-selling of products between the organisations, said industry analysts.
"Talks are at an early stage and no decisions have been taken, so it is too soon to talk about what changes might arise for our customers and employees. We can say that we remain committed to our Leek, Staffordshire, base, our extensive branch network and our strong Britannia brand," said Britannia CEO Neville Richardson.
Britannia said the talks were not taking place as a result of the current turmoil in the sector. Unlike government brokered takeovers such as Lloyds TSB's planned acquisition of HBOS or Santander's takeover of Bradford & Bingley, Richardson said the companies do not need to merge.
PJ Giammarino, CEO at think-tank JWG IT, said the companies will have to move to a common IT platform to achieve the benefits of a merger.
"The bigger an organisation gets in capacity, the more important it is that applications, data and technology infrastructures are aligned," said Giammarino.
The key to integrating legacy systems to make the most of a merger of two businesses is to use more hosted applications in financial services, said supplier Fidelity Information Services.
Ian Benn, managing director payment services at Fidelity Information Services, which gains half of its revenue from hosting and the other half from traditional software licensing, said mergers are often the catalyst of hosted applications being used.
"If you have situations where two firms come together you have to make a choice which applications are best, but there is also a third way," he added.
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