CIO interview: Carlos Abarca, TSB

Carlos Abarca is guiding TSB through its migration from systems hosted by a competitor to a digitally focused in-house core banking platform.

Carlos Abarca is a seasoned veteran when it comes to migrating bank systems onto new platforms, which is exactly what TSB needs as it moves its customer accounts off systems belonging to competitor Lloyds Bank.

When Spanish bank Sabadell acquired TSB in 2015, it outlined its plans to move TSB IT systems, which were hosted by Lloyds, to its own in-house core banking platform, Proteo.

Proteo4UK, as the new platform in the UK is known, was rolled out to the bank’s staff in November 2017 with a full range of banking services. It will move to a full roll-out in the first quarter of 2018.

Moving off Lloyds Bank’s platform will mean TSB no longer pays Lloyds Bank a couple of hundred million a year for hosting, and it will be able to implement its own customer-facing systems, which it couldn’t while being hosted.

“We are in the process of cutting the rope, and the first step is having a core platform up and running. We are now working with Lloyds Bank on the data migration,” Abarca told Computer Weekly. “We have built a new technology platform for TSB, but this is not just a technology refresh or upgrade of an existing core banking system. It is a brand new core banking system.”

Proteo4UK is a version of Sabadell’s in-house core banking platform Proteo designed for TSB. “The architecture is the same but we customise all the customer facing components for TSB,” says Abarca. The system is hosted in two datacentres in the UK.

The clean break from Lloyds Bank will see TSB free of legacy systems. UK banks are often criticised for their reliance on hundreds of legacy mainframe IT systems, which are often interdependent. Complexity makes it difficult to launch new services quickly. Bringing a new current account online will need many systems to be connected up to work. Meanwhile, the IT budget is strained by high-maintenance costs associated with legacy systems.

Keeping the back-end system

Abarca says only one legacy system will be taken over by TSB with the customer accounts. “We decided to keep the mortgages back-end system because it makes no difference to our customers how we settle mortgages.”

This is in line with the company’s customer-centric design approach, which Abarca says will give TSB an advantage in the banking sector. “Some people say there are plenty of customer-centric platforms. But while everybody in the digital world has this, it is not that common in the banking industry.”

He says the key to customer-centric systems is controlling data. “A customer-centric platform means customer data sits in a single repository, which means we have fewer systems. This makes our processes much simpler and means we can deliver a better customer experience.”

TSB has already begun developing services for the new platform. In April, it launched the first fruits of its new core banking system with a mobile app for Android and iOS devices, developed using the Proteo4UK system.

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It is also introducing facial recognition to its mobile banking app, offering Apple iPhone X users the opportunity to use their faces as identification.

But TSB does not expect to do everything customers want itself. Customer services will also be enhanced as a result of open banking when the EU’s Payment Services Directive II (PSD2) regulation comes into force in January 2018. This will enable third parties to access the customer data held by banks via application programming interfaces, if given permission, and offer services using this information.

“This allows us to cooperate with third parties to embed their services and we need a platform that enables us to do this. This is not possible if your platform is not designed to embrace this,” says Abarca.

“Our platform is a service-oriented architecture, so all the different functionalities across the bank are available through web services. You can implement whatever you want on top of that, including services from third parties.”

Abarco was originally a telco engineer who graduated in the US at the Massachusetts Institute of Technology (MIT). He joined a company owned by Sabadell in 2002 and then joined the group in 2007. He was chief operating officer at Sabadell in Spain and moved to London in 2015, when the bank acquired TSB and he became CIO.

In the UK, he says things are a little different to Spain, but he is encouraged by a strong appetite for digital services. “There are lots of peculiarities in the UK such as the number of different payment schemes, which is quite challenging. This is not a challenge, but a characteristic of the problem,” he says.

“The digital appetite of people in the UK is high,” he says. This suits a bank trying to differentiate through its digital platform.

Increased cyber security challenges

With the move to digital comes increased cyber security challenges. Abarco says TSB has been considering cyber security in everything it does. “One of the advantages of our replatforming programme is that we have integrated the latest cyber security technology and our defences are state of the art. If you want to be digital, you have to bear in mind you will be a hotspot for hackers.

“Perfection doesn’t exist in technology, but we are taking all the reasonable steps,” he says.

Abarca has been building an IT team over the past two years, which is a combination of TSB and Sabadell Group capabilities. This is to get ready for moving off the Lloyds Bank systems. “In the previous situation at Lloyds Bank, we were served by Lloyds. But we have built a new team with about 100 people in the UK,” he says.

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