Sainsbury's Bank deal could lead to 'domino effect' on UK banks, says FIS

The outsourcing of Sainsbury’s Bank’s core banking IT could lead to a “domino effect” on the UK financial industry, FIS has claimed.

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The outsourcing of Sainsbury’s Bank’s core banking IT could lead to a “domino effect” on the UK financial industry, FIS has claimed.

It was announced on Wednesday that Sainsbury’s would buyout Lloyds’ share of the 50/50 venture, which relied on using Lloyds’ legacy mainframe systems. Outsourcing and software provider for the financial sector, FIS, was chosen to lead the project of migrating retail-only Sainsbury’s Bank’s data over to its hosting environment.

Mark Davey, Executive VP at FIS, said that this is the first time a that an existing UK bank has taken the decision to move its entire banking platform to an external provider.

“It is very rare to see a bank that is moving all of its system lock stock and barrel onto a new platform and environment,” he told Computerworld UK. “Normally banks do this one solution or product at a time.”

He added: “In the UK market place there is really no bank of the scale of Sainsbury’s that has ever outsourced the running and the support of these applications ever before.”

However, Sainsbury’s Bank is not the first of any UK bank to outsource the running of its core banking systems using off-the-shelf software. Start-up Metro Bank also outsourced the delivery of its systems through Niu Solutions, running a core banking system from Temenos, and major banks have looked to external providers for elements of their banking IT.  MetroBank chief executive Craig Donaldson previously said that the outsourcing of the bank’s IT was “crucial” to it becoming the first new entrant to the UK high street in 100 years.

For Sainsbury’s Bank though the challenge is moving from Lloyds existing infrastructure into the outsourced environment of FIS, an operation that is expected to take up to 42 months, following a year of preparations under a non-disclosure agreement with Sainsbury’s.

According to Davey the lengthy period of transition is necessary to avoid any disruption to the bank’s customers during the difficult process of migrating away from Lloyds’ legacy systems.

“Like any situation where you are moving from one system to another these things are complex and difficult and require an incredible amount of planning and execution, particularly if you don’t want to disrupt business operations which are a critical part of protecting the brand reputation of these organisations.”

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