Nationwide no plans to replace Derbyshire and Cheshire IT

Nationwide has no plans rip and replace legacy systems at the Cheshire Building Society and Derbyshire Building Society, it said, as it prepares for a merger with the two firms.

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Nationwide has no plans rip and replace legacy systems at the Cheshire Building Society and Derbyshire Building Society, it said, as it prepares for a merger with the two firms.

The move will create a company with £191 billion of assets. The decision to create a larger company comes as the housing market continues to slump, and after US mortgage lenders Fannie Mae and Freddie Mac were bailed out by the US government. Both the Derbyshire and the Cheshire made losses in the first half of the year.

In what it calls an “integration light” approach, Nationwide said there would be no member vote after regulator the Financial Services Authority gave the merger the go-ahead under special rules. The new group will be run by Nationwide management.

Nationwide told investors that technology systems “will be largely maintained with linkages to Nationwide core systems”, however there will be some “rationalisation and integration of central functions”. It promised only “modest synergies”.

It said it had learnt how to make the process efficient following its merger with the Portman Building Society in 2007.

Nationwide is currently undergoing a £300 million business transformation programme, under which it is moving to SAP service oriented architecture technology to improve business processes. In the programme, called Voyager, Nationwide is also working with IBM, Capgemini and KPMG.

A voice and data convergence programme is also taking place at Nationwide, under a recent £160 million, seven-year managed services agreement with BT.

The Cheshire Building Society extensively uses Microsoft technology, including Microsoft Windows Server and SQL Server, as well as Microsoft Exchange email servers. Smart Focus customer software provides a single client view and is aimed at improving data quality.

The Derbyshire Building Society standardised much of its software around Microsoft in 2005, including Windows Server and SQL Server running on Dell hardware. It recently revamped a bespoke customer administration system, to improve flexibility, using AppLabs software testing.

Graham Beale, chief executive at Nationwide, said: “The Derbyshire and the Cheshire have independently concluded that a merger with Nationwide is in the best interests of their savers and borrowers given the financial issues faced by both societies. The core member businesses of both societies are in good shape and have a better future as part of a larger organisation.”

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