Nationwide's £1bn IT overhaul

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CASE STUDY There are IT projects and then there are IT overhauls. Most managers are far fonder of the former, for obvious time and budgetary reasons.

Yet, from late 2008, Nationwide, during the most turbulent times the Western economy has ever seen, chose to completely refresh its IT infrastructure. Not only that, it committed £1 billion to the project.

From incorporating acquisitions to building a multi-million pound datacentre, it's been a busy few years for Nationwide. It is aiming to become the slickest financial institution in the UK. Right now, the bank is just halfway there.

The past

Looking back, some may question how Nationwide was able to embark on such an expensive project when banks, and indeed most other organisations, were desperate to cut costs and keep hold of every penny they could.

One major reason for Nationwide's ability to dramatically redesign its IT was the firm's relative financial security compared to others. The company expects to announce double-digit profit growth between 15 and 20 per cent in upcoming results.

Because our capital base is so strong because of the resilience of the business, we have not been distracted by needing to refresh capital.

"If you look at the major banking institutions, they are needing to produce levels of return higher than that because they are needing to rebuild capital," explained chief operating officer Tony Prestedge.

"Because our capital base is so strong because of the resilience of the business, we have not been distracted by needing to refresh capital within the organisation and therefore have been able to continue to invest despite the economic environment."

Three years ago, with enough flexibility in the coffers, Nationwide had some grand IT plans. With a host of fresh executives on the board, including a new CEO, the bank wanted to go from being a mortgage and savings institution to being one that offers the full gamut of banking services. It laid out a number of goals to help it get there.

"The first was to diversify our product set so we could compete more aggressively in the current account market space," Prestedge explained.

"Secondly, we wanted to replace our core legacy platforms which had been in existence for broadly 30 years and we wanted to be the first material banking institution in the UK to do so, to be the only major banking institutution to move to packaged products in totality across all of our product sets.

"Thirdly was to integrate the businesses that we bought, including the Derbyshire, Cheshire and Dunfermline Building Societies."

The present

So far, these goals have translated into a number of major IT moves. Firstly, Nationwide has successfully integrated the regional brands with little fuss.

There has also been a complete replacement of the internet bank designed to cater for mobile users, with the first release now live. The new internet service is available to 300,000 users right now, but will be opened up 2.5 million more people later this month.

With the refreshed internet banking offering, Nationwide - recently ranked number one by Which? for security when compared to competitors - has sought to up protection for users.

"With the new online banking platform, we have already strengthened the firewall components. We are introducing the online authorisation terms of transaction processing, but the real changes we have really invested in are strategic in terms of really properly dimensionally managing, in a neural sense, the performance of the accounts," Prestedge told IT Pro.

"The sophistication around the neural technologies on customer behaviour are now at a point where they aren't just able to close down at the point of entry of the risk but we can monitor, at the individual account level, the behaviour in order to intervene where necessary. There has been a focus on front-end entry and back-end behavioural modelling."

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