Lloyds Banking Group is attempting to stave off rampant competition in the market by tackling its legacy systems with a massive £3bn investment in a digital transformation strategy designed to simplify and modernise its data and IT infrastructure and pave the way for more efficient technology.
Like many large banks formed from multiple mergers and acquisitions, Lloyds Group is heavily reliant on core banking systems that were created in the Eighties. These outdated systems are not only expensive to run, they often lead to excessive processing and slow response times and create a fragmented view of the customer.
With the launch of open banking in January and the rise of challenger banks and fintechs, many competitors have the advantage of a far more nimble and customer-centric operations.
In response, the group – which includes the Halifax, Lloyds Bank and Bank of Scotland brands – said it now intends to deploy new technology to drive additional operational efficiencies that will make banking “simple and easier for customers whilst reducing operating costs”.
The group wants to cut costs below £8bn by 2020; last year, it signed a 10-year outsourcing deal with IBM as part of plans to shift its core infrastructure to the cloud over a three-year period.
Lloyds Banking Group chief executive Antonio Horta-Osorio said: “The external environment is evolving rapidly and I am confident that this exciting and ambitious plan, with the significant additional investment, will mean we remain at the forefront of UK financial services.”
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