Yorkshire Building Society (YBS) has set up a new cloud-based shared services initiative to provide banking applications to other financial services institutions.
Yorkshire, the second largest building society in the UK with £29 billion assets, announced it would partner with HP Enterprise Services to deliver the virtual private cloud, hosted in HP’s data centre.
The aim of the Shared Services Alliance project is to deliver core applications to banks and building societies, and will build on the services offered by the Yorkshire's subsidiary, Yorkshire Key Services, which was set up in 2001 to provide core systems and administration services to smaller scale building societies.
The new service will offer a range of applications for retail banking, including a complete mortgages and savings solution, as well as providing regulatory reporting, business intelligence and business process outsourcing. HP will develop software and provide services expertise to clients.
The cloud-based service will enable greater scale to be leveraged and is expected to allow financial firms to reduce IT investment costs by moving from opex to capex spending models.
“The flexibility to meet ever-changing market needs and customer expectations presents major challenges for any organisation, but especially financial institutions,” said David Henderson, general manager, Group Change, and CIO at Yorkshire Building Society.
“Although the Yorkshire is already a successful provider of IT services through our Yorkshire Key Services subsidiary, this cloud-based Shared Services Alliance will offer a new way of working for the UK financial services market by moving away from a capital model to a service model, reducing costs and time to market.”
Commenting on the deal, TechMarketView research director Peter Roe said that the cloud-based shared services model is likely to gain further traction in the UK financial sector.
“As more companies enter financial services and as established players seek to further reduce costs, this approach will gain momentum,” said Roe.
“Yorkshire and HP will both be able to deepen relationships with the alliance customers and build annuity revenue. As usage of this service grows, cost savings should increase, providing a win-win for all the participants.”
He added: “This model could be copied by those companies in the financial services sector which provide administration, settlement and regulatory reporting services for others in their respective market sectors.”