RBS says ‘overdue’ IT standardisation aiding recovery

RBS says ‘overdue’ IT standardisation aiding recovery

Group makes £1.1bn losses but claims tech investment aiding operations

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The Royal Bank of Scotland has said an “overdue” investment in technology standardisation is crucial to its future, as it delivered a £1.1 billion annual loss.

Stephen Hester, chief executive at the bank said: “We are completely clear – success in serving customers is the key to our business future. Overdue investment in service, technology and a changing cultural approach is starting to roll out across RBS.”

RBS is spending £6 billion overhauling its IT and marketing operations, and is implementing an undisclosed global technology platform following a string of large acquisitions over the last decade.

On the day the 83 percent state-owned bank said its losses had narrowed to £1.1 billion – from £3.6 billion last year and £24.3 billion in 2008 – Hester showed a slide to investors demonstrating the group’s technology standardisation.

Shared technology, including software and datacentres, is in increasing use across the bank’s divisions. These units include UK retail banking, corporate banking, wealth management, and transaction services.

The divisions also share customer contact centres and processing functions. Vendor management is centralised to serve all the divisions.

In retail banking, quarterly costs had fallen by two percent “with continued management focus on process re-engineering and technology investment”, RBS said in a financial statement issued today. In corporate banking globally, technology investment was vital for “offence and defence”, it said.

In 2009, Hester said that the bank had been “built as an acquisition machine”, comments thought to refer in part to the RBS-led acquisition of ABN Amro in 2007 for £48 billion, the largest acquisition in European banking history.

As a consequence, Hester said, technology quality had been “neglected through a series of distracting business integrations”. The bank, he said, was struggling with running “lots of different systems”.

Nevertheless, the bank has been extensively cutting jobs. Last September, it announced 3,500 job cuts from its UK-based technical and back office division.

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