Three years ago, Nationwide fired the starting gun on a £1bn+ transformation programme which would remake huge portions of its IT infrastucture. The scale of the programme can be seen in what has been achieved so far – for example, a new £150m fully virtualised datacentre which opened on time and slightly under budget last December.
Nationwide has also outsourced its networks and desktops to BT and Computacenter respectively, and integrated several regional businesses it had acquired – Cheshire, Derbyshire and Dunfermline building societies – at an operational level, including consolidating 11 regional contact centres down to three, all now based in Scotland.
It has also launched a new front-end mortgage platform based on Microsoft technologies – putting £7bn-worth of business through the new platform so far, and taking out between 35 and 40 per cent of the operating costs for the origination of mortgage lending within the group. Nationwide has the second-largest mortgage book in the UK – some 15 per cent of national mortgage balances, according to Tony Prestedge, its group development and operations director.
In the first four months of next year, the company plans to implement this platform on a multichannel basis across its branches and call centres, says Prestedge: “What we built was a fully multichannel origination and lending platform. It’s live across the intermediary estate which is about 50 per cent of our business – we’re now rolling it out across our branded channels. When that is live and operational it will originate circa £20bn worth of lending per year.”
On the banking and savings front, Nationwide embarked on a “monolithic programme” in 2008: a back-office transformation to replace Unisys with SAP across the estate of 20 million accounts – a £400m project in its own right. This deployment is running late by more than a year and is over budget, albeit “within contingency” levels, according to Prestedge.
The project is in pilot now and Prestedge expects the platform to be live between July and December 2012, with current and savings accounts set to be migrated throughout 2013.
Part of the reason for the project’s delay has been the need to respond to regulatory changes triggered by the global financial crisis, according to Prestedge. “Because of the regulatory environment we’ve been in, part of that delay has been because we have simply not been able to focus on the new platform deployment – because we have consistently needed to drag resources back to do legacy application deployment,” he tells silicon.com.
But the programme itself has also proved challenging, owing to the sheer size and scale of the transformation. “There is absolutely no doubt that the complexity of the programme – of replacing your entire ledgers for banking and saving in a business with 15 million consumers and 20 million accounts – has been horrifically complex,” he says. “We all know that you don’t change the heart in a patient without there being some challenges. But also some of the delay has unquestionably been associated with the scale of regulatory changes we’ve been faced with concurrently.”
As well as the back-office transformation, Nationwide also kicked off a…
…front-office transformation with a new internet bank – now live with 300,000 members, according to Prestedge. Migration will ramp up this month, to ensure all 4.5 million accounts are migrated to the new internet bank by the end of November.
The front-office transformation programme will also include new applications in call centres and branches – so Nationwide has a fully integrated sales applications stack, says Prestedge. “I expect that after the internet bank being live and stable we will start the programme of deployment of those applications into our other channels early 2013,” he adds.
Add to that, the company is also replacing its payments platform – live already for faster payments. By the end of this year, Nationwide will have real-time financial transactions across all of its customer base, says Prestedge, and will be making those payments platforms integrate with SAP in the first half of next year.
Ahead of it, there’s much more to come – not least a whole cloud computing strategy to be shaped now that Nationwide has the infrastructure in place to support it. “Having built the infrastructure to be resilient, what we are now doing is thinking through how we leverage cloud computing and what is our appetite for third-party hosted apps,” he notes.
“I have a strong view that you enter into the world of cloud only once you’re really sure that your own infrastructure estate is resilient, well architected and understood, because then you understand the risks you’re taking. And for a business that’s as highly regulated as banking, you can understand the decisions in the context of the regulatory environment.
“Until I had the new datacentres live at the back end of last year and the infrastructure estate largely virtualised, it would have been an exercise in theory,” Prestedge adds.
There’s also the technical integration of the acquired building societies – to put them on a common apps platform with the rest of Nationwide’s business. This is on ice until 2013-14, after the banking and savings programme is fully delivered. “As you can imagine, I don’t want to decommission their apps, put them onto Unisys and then take them off Unisys [to put them on SAP],” says Prestedge.
Mobile is also an area where Nationwide is looking to develop, says Prestedge, adding: “The internet revolution took a very long time to happen; the mobile revolution will happen at a pace that I believe will surprise all of us.”
The building society is probably a third of the way through the transformation it kicked off in 2008, according to Prestedge – which, while originally slated as a five-year programme, is now described as “multiyear”. So what would he have done differently if he could turn the clock back to 2008?
“If I had my time again…
…I wish we hadn’t shot the firing gun for every single programme almost on the same day and we had more effectively sequenced inception through to delivery so we knew we had the capacity,” he says. “I think one of the mistakes we did make is we allowed the programmes to operate largely independently of each other. And therefore, over time, we have needed to drive much closer consolidation and integration across the portfolio.
“If you’re replacing your payments platform, the banking platform absolutely needs to know when that’s going to happen and also there’s a risk that you waste money on re-architecting and redesigning because you’re designing against both legacy and new. And I think if I’m honest we were na