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RBS to Halve its Technology Platforms

The cost-cutting move is part of an overall restructuring at the troubled bank.

RBS said it is planning to reduce the number of technology platforms it uses by 50 percent as it seeks to change its focus from a being a "global titan" to a "first-rate UK bank."

In a post on the RBS website, CEO Ross McEwan said the troubled bank is looking to simplify its products and services by moving from a bank with seven divisions and seven support departments to a bank with three customer businesses – personal, commercial, and corporate – supported by one shared support structure.

"RBS will be a smaller, simpler and smarter UK focused bank that puts the needs of its customers at its core," McEwan wrote. The bank had more than £8 billion in pre-tax losses in 2013, with McEwan saying the bank's cost-to-income ration soaring to 73 percent.

With a goal to reduce that number to 50 percent, McEwan said RBS is seeking to cut around £1 billion of operational spend "on things that don’t help our customers." That includes reducing the number of core banking systems from 50 to 10, and the number of payments systems it maintains from 80 to 10.

"These changes will allow us to invest in technology," he explains "We have made progress over the last year in improving the resilience of our systems and our investments over the next 12 months will maintain that focus. Once we have a resilient base, in the following two years we will seek to make progress in building an agile and flexible technology platform that makes banking easier for our customers."

Among other customer-centric changes RBS is planning is to cease offering different rates to customers depending on if they are online or in the branch; stop offering deals and products to new customers that the bank is not prepared to offer our existing customers; and make all "but the most complex small business lending decisions in five days, not five weeks."

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Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as a municipal and courts reporter for daily newspapers in upstate New York, Bryan has ... View Full Bio

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Greg MacSweeney
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Greg MacSweeney,
User Rank: Author
3/11/2014 | 2:59:09 PM
re: RBS to Halve its Technology Platforms
I also don't think RBS would be doing this if things were going well. There is a tremendous amount of risk associated with reducing the # of technology platforms by 50%. If it isn't done correctly and business suffers, the losses could outweigh any gains in efficiency or cost cutting.
Ivy Schmerken
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Ivy Schmerken,
User Rank: Author
3/7/2014 | 3:29:46 PM
re: RBS to Halve its Technology Platforms
I don't think a bank would attempt this type of radical downsizing unless there was a lot at stake financially. As Bryan wrote, RBS ha. -8 billion in pre-tax losses in 2013, with McEwan saying the bank's cost-to-income ration soaring to 73 percent. I agree with everyone that simplification and streamlining its platforms and business lines can lead to more stability and profitability over the long run.
Byurcan
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Byurcan,
User Rank: Author
3/4/2014 | 10:11:39 PM
re: RBS to Halve its Technology Platforms
True, it may be that RBS' hand is forced by their fiscal woes, but they will likely be better off in the long run as a more streamlined operation.
Yaldez4FSI
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Yaldez4FSI,
User Rank: Apprentice
3/3/2014 | 10:44:22 PM
re: RBS to Halve its Technology Platforms
Yes, cutting the number of supported technology platforms and going to a shared service model will help RBS save a lot of money. Easier said than done. I wish them well.
Byurcan
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Byurcan,
User Rank: Author
3/3/2014 | 8:18:51 PM
re: RBS to Halve its Technology Platforms
Yes, that seems like a likely outcome. RBS is just going through what most big banks will have to, or already have begun; reducing the uneccessary amount of infrastructure that was invested in in the decade or so prior to the financial crisis.
Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
3/3/2014 | 6:45:14 PM
re: RBS to Halve its Technology Platforms
That seems to be an inevitable consequence any time an organization tries to streamline its IT.
KBurger
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KBurger,
User Rank: Strategist
3/3/2014 | 12:58:13 AM
re: RBS to Halve its Technology Platforms
These are big moves and not surprising given the broader restructuring at RBS -- however, these kinds of initiatives are not unique to troubled or struggling institutions (or big banks). Banks of all sizes and economic health are looking to simplify and gain flexibility, gain more customer insight and shift tech-related spending to revenue generation, customer experience, omnichannel. One would hope that RBS would be embarking on similar moves even if it wasn't "troubled."
Ivy Schmerken
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Ivy Schmerken,
User Rank: Author
2/28/2014 | 11:44:49 PM
re: RBS to Halve its Technology Platforms
Downsizing its technology platforms by 50 percent is massive overhaul, but an admirable one to get the bank on the right track. The mantra of big is always better is not always true. RBS has been struggling since the financial crisis. Now it wants to change from being a global titan to a first rate UK bank. It sounds like it's also changing its culture to one that is more customer-focused. But the operational savings of 1 billion pounds must also result from shrinking the IT staff, perhaps?
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