UK-based banking group Lloyds is reportedly planning to switch its IT infrastructure to a new core banking platform in order to reduce operating costs.
According to a Financial Times (FT) report, Lloyds Bank is planning to transfer data of 500,000 customers from its legacy IT infrastructure onto a cloud-based core banking platform developed by Thought Machine.
The FT report says that if the platform move is successful, Lloyds could carry out a similar transfer across the next few years.
The move comes three months after Lloyds partnered withThought Machine and invested £11m for a 10% stake.
Lloyds plans to shift customer data into Thought Machine’s core banking platform, known as Vault. Thought Machine’s cloud-based platform, Vault, is said to simplify outdated online systems and help reduce operating costs for the company.
According to the report, ‘Vault’ provides better insight into customer data, as well as faster development cycles, and further digital banking improvements.
Lloyds, which spends around £2.2bn a year on maintaining its IT infrastructure, is expected to save more than £750m in annual costs, according to the FT report.
However, the potential transfer of customer records is likely to face strict assessment from regulators due to multiple system failures over the last few years.
Last year, TSB banks failed migration from parent company Lloyds’ Banking Group’s system cost the company £200m.
Lloyds Bank recently secured a banking licence in Germany to operate in the EU market post-Brexit.
Lev Lesokhin, SVP of strategy and analytics at CAST, commented on Lloyds’ announced change, saying: “Lloyds Banking Group are to be congratulated for taking action to modernise. However, a move of this size, migrating the data of half a million people, carries considerable risk.
“To avoid the problems experienced by others, LBG should undertake a comprehensive, MRI-like scan of their current, and future, systems as a matter of priority… to help decision-makers understand the hidden complexities of otherwise-impenetrable legacy IT, as well as ensure the readiness of systems to be modernised and/or re-platformed, ensuring they run well in any environment.”