B&B saga exposes retail banking IT shortfall

10 June 2008

2 minute read

B&B saga exposes retail banking IT shortfall

The finger has been pointed at Bradford & Bingley's clunking IT systems for failing to provide up-to-date figures. And it's not the only building society in desperate need of skilled technologist to drag them out of the doldrums.

The FT reports that "hopelessly antiquated information technology" at B&B left the bank in the dark about just how in the red it was with its mortgage arrears, an IT situation not dissimilar to Northern Rock.

The Nationwide Building Society last month became one of the first lenders to purchase off-the-shelf software, moving to a version of SAP's core banking platform. It's a bit of trail-blazer - lots of retail banks rely on legacy systems that are up to 40 years old.

However, according to research from Capgemini, 90% of banks are willing to change from legacy systems, but few have yet done so.

"Tremendous industry consolidation, increased customer transaction demands and data management have led banks to feel increasingly limited by the capabilities of their core banking systems," said the report.

Also, the current systems simply aren't flexible enough to cope with requirements around regulations like Basel II, MiFID and SEPA.

Chris Potter, partner in the technology division of PricewaterhouseCoopers, says: "The business is changing very rapidly, and the credit crunch has had an enormous impact on the way in which retail banks need to manage their capital, and their mortgage books. As a result, a lot of banks are looking at how their systems support that sort of decision-making, and good business analysts are in demand."

But developers shouldn't hold their breath for the job roles to come flowing in. Ralph Silva, analyst at Towergroup, reckons the current economic climate means banks are holding off taking the plunge.

"We do not believe that large banks would dare make a radical change such as core banking replacement in 2008 because of economic conditions," he says. "If economic conditions do not improve in 2009 then you will not see it then either."

Moreover, the money's not that great. A programme manager in the retail sector can bring in 35k-48k, while a business analyst can expect 45k-60k.

AUTHORPaul Clarke

Sh
Shadok
10 June 2008
It is more than a bit entertaining to hear that the FT blames poor technology. For years the FT, like other media has been saying that "technology is not important, what matters is the business". By business they of course mean sales and accountancy. Thus most IT directors are accountants who didn't actually make it as accountants, and technology is seen as a dead end with no hope of career progression. Visit the HQ of B&B or Norther Rock, or Barclays and you will see that the IT people sit in the worst quality of office. What message does that send ? Do you really think that an IT director whose understanding of technology is based solely on going to golf tournaments with management consultants can lead people to deliver reporting systems that actually work ? At most retail banks, an IT person who spoke to one of his betters would risk his job, certainly would not be part of the decision making process.
Reply