This year, like the previous couple, has been dominated by the rise of fintech (financial technology) firms and the emergence of fintech within traditional financial services businesses. Within the big banks, for decades reliant on mainframe legacy systems, there has been a rapid acceleration in the take-up of the latest digital technologies and techniques.
Spurred by the emergence of new competitors driven by tech, some banks are beginning the journey from legacy systems to new, more digitally advanced platforms. Some have tried before and learnt hard lessons, as a report into TSB’s IT migration disaster, published this year, revealed. These lessons are important in the finance sector, which is heavily regulated, as banks increasingly move workloads into the public cloud. This is the best way to improve efficiency and introduce agility, but is fraught with danger.
Here are Computer Weekly’s top 10 financial services and fintech stories of 2019.
1. Lloyds Bank to migrate hundreds of thousands of customers to Google-inspired fintech
Lloyds Banking Group is planning to move 500,000 customer accounts from its legacy IT onto a cloud-based core banking platform from fintech firm Thought Machine.
According to an internal presentation, the bank is in discussions with regulators about moving customers from its Intelligent Finance division to Thought Machine’s banking platform. Lloyds, which has invested in Thought Machine, has already announced that it is exploring the use of its technology through its relationship with IBM.
2. Barclays banks on agile and DevOps to tackle competitive threats in fintech
Banking giant Barclays has opened up about the challenges and successes it’s had during its 18-month push to adopt agile working practices in all areas of its business.
Speaking at the Enterprise DevOps Summit in London, Jonathan Smart, head of development services at Barclays, said agile processes and thinking were being incorporated in all areas of its business – not just IT.
3. Bank of England to migrate from core system with a one-off big bang
The Bank of England plans to complete the replacement of the 23-year-old core system it uses to settle payments between banks with a big-bang migration before 2025.
The real-time gross settlement (RRTGS) system settles payments made on payment systems including the clearing house automated payments system (Chaps) and bankers’ automated clearing services (BACS).
4. Public cloud computing is early on its journey to core of the bank
Banks have quickly moved from not talking about what they are doing in the cloud to publicly boasting about the size of their clouds.
Traditionally, banks don’t like to talk about what they are doing with technology until it is established and proven. They don’t want to give away their secrets or risk damaging headlines if things go wrong. But at the recent SIBOS and Amazon Web Services events in London, they were not holding much back when it came to cloud computing.
5. Direct Line built an insurtech it can tweak a thousand times a day
Insurance company Direct Line Group is using a standalone insurtech (insurance technology) business in the public cloud to enable it to continuously test and adapt ways of serving customers. The new business, known as Darwin, was set up earlier this year to provide a digital platform that could be quickly adapted to changes in demand.
The new business sits separately from traditional businesses, such as Churchill, Green Flag and Direct Line.
6. IR35 reforms: Lloyds Bank contractors to get deadline on future employment status
Lloyds Banking Group is to phase out its use of contractors that engage with the firm via personal service companies (PSCs) in preparation for the IR35 tax reforms being extended to the private sector, Computer Weekly has learned. The move is likely to affect hundreds of IT contractors.
The banking giant was preparing line managers to hold one-to-one discussions with affected contractors from 8 October 2019, during which they were to be told the company has no plans to extend their current PSC contracts beyond March 2020.
7. CIO interview: John Finch, Refinitiv
Refinitiv CIO John Finch is wrestling with talent challenges and contemplating how the company will move its products to the cloud.
His role at the company, which was previously the Thomson Reuters financial and risk business, is a small step but a giant leap from his previous job at the Bank of England, where he spent three years as CIO.
8. Don’t bank on Google Bank, bank on banks becoming Google-like
The journey to Google Bank is happening as Lloyds Bank signals its intent to move to a platform inspired by the workings of the Google engine room. After three years working at Google in what he described as being “in the kitchen of a master chef” for a software engineer, former Google tech lead Paul Taylor is now serving up the fruits of his learnings to the banking sector.
9. Inside NatWest Ventures
Traditional banks are striving to offer their business customers access to ecosystems of digital services providers that go beyond payments and loans.
In the past, banks offered business customers services in areas such as accounting or human resources (HR), as well as the more traditional payments and loans, through their own legacy systems. Now they are increasingly using startups to offer more efficient services.
10. TSB program pulled apart in report on IT meltdown
TSB’s management and the IT supplier that supported them were not ready to implement and run the bank’s new core banking platform, which resulted in its botched launch, a report has said.
Disaster struck in April 2018, when the bank migrated five million customers from Lloyds Banking Group systems, where they were hosted, to a new core banking platform. Millions of customers found themselves locked out of their accounts, some saw money disappearing from accounts, and others were even able to see other people’s accounts.