Financial services companies are the biggest users of IT and their strategies tend to set the trends for the rest of the UK. We review the stories that were making the news during 2007.
Click on the headlines to read the full story.
January
Co-op to extend outsourcing
deal to build business
Co-operative Financial Services (CFS) is in the final stages of negotiating an
extension to an outsourcing deal that will double the number of its external IT
development staff.
CFS signed a £22m seven-year contract with Xansa in 1994 which has already been extended twice, most recently in 2003.
This latest extension, expected to be finalised in March, is part of a wider review of the Co-operative Group’s sourcing model, and will include the outsourcing of software development for Co-operative Insurance Services.
Online bankers support
tighter security
More than nine out of ten (91 per cent) bank account holders are willing to use
new authentication methods that go beyond the standard 'username-and-password',
if their banks decided to offer stronger security, according to vendor RSA.
In addition, trust in the online channel continues to erode. Some 82 per cent of account holders are less likely to respond to an email from their bank due to scams including phishing – up from 79 per cent in 2005 and 70 per cent in 2004 – and more than half say they are less likely to sign-up for or use online banking as a result.
In addition, 44 per cent of account holders said they have become increasingly concerned about other types of attacks (besides phishing), such as Trojans and keyloggers, over the past six months.
Deutsche Bank builds new IT for richest clients
Deutsche Bank is implementing a new global IT system in its Private Wealth Management (PWM) business to strengthen its competitiveness in this exclusive market.
Covering both front- and back-office, the project will provide electronic channel capabilities with features for operational and analytical customer relationship management (CRM), process workflow and channel banking.
Bank victim of record phishing strike
Sweden's largest bank, Nordea, has suffered the biggest internet fraud in history, it was announced today.
Over 8 million kronor (£600,000) has disappeared in three months as a result of tailor-made trojans launched by Russian criminals. Latest reports indicate that 250 customers have become victims so far.
The bank and the police have been unable to stop the attacks, but do have 121 people on the suspect list.
February
PayPal acts to stamp out
phishing attacks
PayPal’s decision to introduce an optional two-factor authentication system highlights the increasing concern of banks and online payment organisations over phishing.
The amount of money lost to online banking fraud in the UK increased 55 per cent to £22.5m in the first half of 2006, according to figures from banking industry body Apacs – and all the signs indicate this amount will continue to rise.
Most phishing emails now target PayPal and eBay customers, largely because they are such a huge demographic – 123 million customers at the end of 2006 – but also because PayPal is designed to make it easy to move money around, predisposing it to being phished.
Insurance firms at risk from IT systems
Insurance companies are risking future profits as they struggle with the cost and complexity of existing IT and legacy systems, according to the Economist Intelligence Unit.
The European-wide survey of 126 executives from the insurance industry, conducted for BT, reveals that legacy systems, poor integration and an uncoordinated view of the customer could de-rail insurer's quest for profits.
The survey says more than half of insurers have between one and 12 legacy IT systems and nearly one in 10 have more than 25.
Credit Suisse signs £578m IT deal
Investment bank Credit Suisse has signed a £578m partnership with BT and Swisscom for management of its global networking function.
The minimum five-year contract will include the transfer of 231 employees and 50 contractors and an option to extend to seven years.
There is also provision for a broad package of services to enhance the bank’s operating efficiency and address requirements across Credit Suisse’s enterprise and financial trading environments.
Nationwide fined for
laptop theft
The financial regulator has fined the Nationwide Building Society almost £1m
following the theft of an employee's laptop in August last year.
Nationwide was penalised to the tune of £980,000 for not having adequate information security procedures and controls in place, potentially exposing the society's 11 million customers to an increased risk of financial crime, said the Financial Services Authority (FSA).
HSBC tries out interactive boardrooms
Global banking giant HSBC is to pilot virtual boardrooms in its major global offices from June.
The high-quality teleconferencing facilities in London, Paris, Hong Kong and New York are being developed at a cost of about $100,000 (£51,000) each.
HSBC group chief information officer Ken Harvey says the company will examine savings generated from a reduction in air travel before deciding on the viability of further installations.
March
London and Tokyo exchange assets
The London Stock Exchange (LSE) and the Tokyo Stock Exchange (TSE) have formed a business alliance that will involve sharing IT assets and collaboration on development projects.
The co-operation agreement was signed last Friday and is ultimately intended to enable round-the-clock trading.
Robin Paine, LSE chief technology officer, says the agreement will provide mutual benefits.
Payment services provider Voca and banking network operator Link have announced plans to merge to become the largest processor of direct debit and direct credit transactions in Europe.
The new company VocaLink is expected to processes over eight billion transactions a year. VocaLink will be able to offer a range of services for both cash machines and automated payments.
The two companies are already working in partnership to build the infrastructure behind the UK’s Faster Payments initiative for real-time payments by the end of 2007.
Lloyds TSB closes Indian call centre
UK bank Lloyds TSB will be closing its Indian call centre after implementing interactive voice recognition software which has reduced telephone enquiry numbers.
A spokesperson for the bank told Computing the Indian call centre which was previously handling the overflow calls from Lloyds TSB’s 10 UK call centres was no longer needed.
Online banking fraud rises sharply
Online banking fraud losses have increased 44 per cent from £23.2m in 2005 to £33.5m in 2006 according to figures released by banking body Apacs today.
Total card fraud losses fell by three per cent in the past year to £428m – a decrease of nearly £80m over the past two years. This fall has been driven by a 13 per cent decrease in UK domestic fraud and the combined reduction of more than £45m in mail non-receipt and lost and stolen fraud.
HSBC cuts costs by standardising Linux
Banking giant HSBC is taking advantage of the collaboration between Microsoft and Novell.
Microsoft will provide HSBC with certificates for three-year priority support subscriptions to Suse Linux Enterprise Server from Novell, enabling the bank to reduce its total cost of ownership for Linux and improve interoperability with its existing Microsoft Windows infrastructure
IT budgets at financial firms on the rise
Financial markets firms are significantly increasing their IT budgets to improve competitiveness, according to research.
A study by analyst Datamonitor found an average 11 per cent increase in IT budgets this year compared with last year across financial markets.
Amit Shah, the report’s author and analyst in Datamonitor’s financial services team, says the increase is significant compared with the steady three to four per cent rise invested by such firms over the past few years.
Halifax admits customer data has been stolen
UK bank Halifax has started writing to 13,000 mortgage customers to inform them that some of their details were contained in documents stolen from a member of staff late last week.
The bank says a briefcase including customer account details was stolen from a Halifax employee's car late on Wednesday evening last week. The incident was promptly reported to all the relevant authorities, including the Financial Services Authority (FSA).
April
Banks’ role in reporting e-crime raises concerns
Industry experts have criticised new procedures that make banks the first point of contact for reporting online fraud.
From this week, businesses and consumers in England, Wales and Northern Ireland have to report instances of online, cheque and card fraud to their bank or building society instead of the police.
Barclays to tighten online banking security
Over half a million Barclays bank customers will be the first UK banking customers to be issued with handheld chip-and-PIN readers later this year to improve online security and combat identity theft.
The bank will provide standalone calculator-size two-factor authentication card readers to customers transacting online with third parties.
The bank will supply card readers to half a million of its two million online banking customers.
Nationwide cracks down on phishing
Nationwide Building Society has improved its anti-phishing technology to help shut down fake web sites faster, after becoming an increasingly regular target of phishers.
The financial services firm has formed a strategic fraud group and installed anti-phishing software from vendor MarkMonitor to respond to attacks.
FSA farms out IT in £80m
deal
The Financial Services Authority (FSA) is outsourcing its IT infrastructure and
service delivery to Fujitsu in an £80.8m eight-year deal to transform the
organisation’s technology performance.
The deal, which includes a no penalty exit clause after five years and £56.2m, is part of a larger IT transformation programme the financial regulator launched in August 2005.
FSA chief information officer Darryl Salmons told Computing the contract will enable the organisation to become a top-performing IT department in its industry sector by September 2008.
Voca deal to improve
European payments
UK payment processing firm Voca has signed a contract that will improve
cross-border financial transactions in Europe.
The deal, with payment services firm EBA Clearing, will extend Single Euro Payments Area (Sepa) processing for Voca.
Sepa is intended to make cross-border payments as simple as domestic transactions by centralising and automating payment infrastructures. From 1 January 2008, every bank in the Eurozone must be able to deliver Sepa credit transfers to customers of any other bank.
May
Technology experts have raised concerns about the security of the City of London’s new WiFi network.
The network, turned on last week, covers the heart of London’s financial district, serving more than 350,000 people, comprising 127 nodes, and offering 95 per cent coverage to the area.
But security professionals say the sheer scale of the network, the biggest in the country, makes it almost impossible to guarantee its security.
MiFID rush could leave security headache
Security risks are in danger of being overlooked by Investment firms in the rush for Markets in Financial Instruments Directive (MiFID) compliance according to experts.
Many firms will be late to hit the 1 November compliance deadline, and in complying firms could be failing to build security into record keeping processes.
Banks agree rollout of contactless payments
Londoners will be the first UK residents to be issued with contactless c redit and debit cards to pay for low value items following the banking industry’s agreement on a national standard.
The rollout of contactless cards in September will involve all major banks and pave the way for a national rollout, according to the banking industry body Apacs.
Customers will be able to pay for items under £10 at selected retailers in the City and Canary Wharf by simply tapping their cards on a reader at the till or vending machine.
RBS consolidates customer details
The Royal Bank of Scotland (RBS) is to consolidate data from more than 1,500 sources to give sales staff a single view of customer information.
The bespoke tool will be a single port of call to establish which banking services a customer uses, their behaviour patterns and credit risk.
June
HSBC online sales more than double
Online sales at HSBC shot up by 55 per cent in 2006 as more personal and business customers tuned into the benefits of banking on the web.
In total the bank's web sites handled 1.8 billion visits in 2006, HSBC group chief executive Michael Geoghegan told the bank's annual general meeting this week.
Competition arrives for London trading
After four years in development, the London Stock Exchange’s (LSE’s) core trading platform, TradElect, goes live this month against a background of major changes in the capital markets landscape.
The European Commission’s Markets in Financial Instruments Directive (Mifid), which comes into force in November, has made it easier to set up a trading platform in competition with traditional exchanges, such as the LSE.
And downward pressure on technology prices makes IT infrastructure investments no longer the inhibiting factor that they once were.
European Union set for finance directive
Final guidelines for the European financial services directive were issued last week, just five months before the deadline.
Firms have until November to meet the requirements of the Markets in Financial Instruments Directive (Mifid), which aims to create a single, cross-European market to allow faster and cheaper share transactions.
July
IT initiatives at heart of HSBC’s green resolution
As environmental responsibility becomes increasingly important to business, global banking giant HSBC is putting technology at the forefront of efforts to go green.
Many leading companies have announced carbon reduction initiatives, but few have revealed as much detail about the role of IT innovation, and the scope of HSBC’s ambitions offers an insight into best practice in green computing.
Last month, the company announced a five-year, £45m global environmental efficiency programme. The action plan includes a push to develop a sustainable business through changes to IT operations and procurement.
Plans for same-day bank transactions delayed
The November launch date for the UK’s faster payments initiative has been delayed because it failed to meet its testing schedule.
The faster payments initiative involves 13 UK banks developing a new infrastructure to speed up 24-hour internet, phone and standing order payments to reach the recipient’s bank account within a few hours.
Retail banking trade body Apacs says a new launch date has not yet been decided and consultants are determining an appropriate date to launch.
Financial services move towards individual e-trading
Investment banks Citigroup, Lehman Brothers, Merrill Lynch and Morgan Stanley are developing an electronic trading platform for unregistered securities in the latest move by financial services away from traditional exchange systems.
The European Commission’s Markets in Financial Instruments Directive (Mifid), which comes into force in November, will deregulate the sector and make it easier to set-up alternative trading platforms. Falling technology prices are also a key factor.
August
London's finance sector boosts IT jobs
London generates more than a third of IT jobs because of the dominance of the financial services sector.
But as offshore wages begin to rise, so does the competitiveness of UK regions, say experts.
The capital is home to 39 per cent of technology posts nationwide, though it represents only 12 per cent of the total population, according to research published this week by ReThink Recruitment.
Royal Bank of Scotland (RBS) is the latest bank to offer mobile phone banking, following the lead of HSBC, first direct and Alliance & Leicester.
The service will allow 13 million RBS and NatWest customers with debit cards to view account balance and statement information through their mobile.
Faster payments arrive
slowly
The technology programme to cut banks' three-day clearing period has run into
difficulties and is running six months late.
The November 2007 deadline for the introduction of the faster payments scheme has been pushed back to May 2008, according to banking body Apacs.
Web users prefer banking online to the high street
The internet has overtaken high street branches as web users' preferred channel for banking, according to a survey.
Eighty per cent of the UK’s online population has embraced internet banking with 64 per cent managing credit card finances online, despite nearly 41 per cent admitting to being afraid of online fraud.
Standard Chartered signs
contract with BT
Standard Chartered Bank has signed a contract with BT to for network services
covering 16 countries.
A failover system provided by the UK telco will cut out single points of failure and minimise the risk of network failure.
The network will help guarantee the quality and availability of services used for access to centralised banking applications and systems in the bank's data centres.
September
LSE cuts fees and increases trading speed
The London Stock Exchange (LSE) has cut its prices in response to competition from trading platforms spawned by incoming European financial regulations.
But a four-year £40m technology upgrade completed in June improves transaction speeds sufficiently to recoup the lost revenue by increasing trading volumes, says the LSE.
Investment bank upgrades
systems
Investment Bank Dresdner Kleinwort is upgrading its core banking systems to help
comply with a Europe-wide single payments initiative.
The creation of the EU Single European Payments Area (Sepa) – to be introduced fully in 2010 – will mean all electronic payments are considered domestic.
Barclays uses visitor profiles to build online sales
Barclays is making 10 per cent extra from online promotions by building a profile of each web site visitor and tailoring advertising accordingly.
But experts have raised concerns over issues of privacy. The bank aims to maximise conversion rates ¬ the number of sales made online compared with the amount of visitors - by analysing behaviour on and off the Barclays site, said head of online marketing and content Julian Brewer.
October
Bank regulations boost outsourcing
Compliance with in-coming European financial rules has boosted banks' outsourcing spend by nine per cent this year.
And Markets in Financial Instruments Directive (MiFID) projects will lead to on-going growth into 2008, according to research from Pierre Audoin Consultants.
Many banks will not meet the deadline for MiFID compliance on 1 November – chiefly due to lack of guidance and unrealistic timetables.
Banks' IT needs more customer focus
The IT systems of financial services companies in the UK are not focused enough on customer service, according to research by the Chartered Institute of Bankers in Scotland and consultants Charteris.
Many organisations do not have access to a single, standard customer record, and customer-facing staff are not able to access all the information they need.
Many IT systems do not enable data to be shared between isolated stores of information, says the research.
Lack of IT investment to delay Mifid benefits
The benefits of incoming European financial services regulations will not be felt for up to 18 months because some firms are not making the requisite IT investments, say experts.
The Markets in Financial Instruments Directive (Mifid) – which creates a single market for investment services – could save UK firms £200m a year when it comes into force on 1 November, according to estimates from the Financial Services Authority.
HSBC is rolling out a real-time card fraud detection system in the UK following its successful implementation in the US.
The system will scan all HSBC’s UK card transactions and identify potentially fraudulent items in less than 30 milliseconds. In the US project, the number of transactions scanned for potential abuse increased by 87 per cent.
The bank aims to roll out the security measure for transactions involving more than 100 million credit or debit cards in more than 30 countries.
November
IT has key role as Lloyd's rings changes
Housed in a landmark symbol of modernity in the heart of the capital’s financial district, Lloyd‘s of London’s current home at One Lime Street was designed by world-renowned architect Sir Richard Rogers.
At no point in the institution’s history has technology been so critical. So it is no surprise that the newly-appointed chief information officer (CIO) is tasked with the job of leading the oldest insurance exchange into the digital age.
The thought of waiting to be served by a cashier in a bank may soon evoke feelings of nostalgia rather than frustration, thanks to advancements in financial services technology.
UK banks are becoming increasingly efficient, streamlined organisations ¬ and the changes are being driven chiefly by IT.
Credit crunch may create IT jobs
Demand for IT professionals in the financial sector could rise as companies seek to repair the damage from the global credit crunch.
The sub-prime mortgage crisis in the US has started to affect the UK's IT industry, as businesses tighten their belts in response to the economic uncertainty.
But demand for skilled workers could actually increase if financial institutions decide to upgrade their supporting infrastructure, according to staffing company ReThink Recruitment.
December
Banks' marketing held
back by legacy IT
Retail banks want to target their marketing to customers more carefully, but are
being held back by legacy IT systems, according to new research.
Nine out of 10 banks said that more targeted marketing would positively impact on sales, but seven out of 10 said they are struggling to keep up with the required changes in channel activity to meet customer demand.
Project Turquoise is a next-generation share trading platform set up to compete with traditional Bourses such as the London Stock Exchange (LSE), helped by the EU Markets in Financial Instruments Directive (MiFID).
Turquoise is expected to launch in 2008 and Yann L’Huillier, formerly at the Boston Stock Exchange, started last week as its first chief technology officer. He talked to Computing about the challenges of the job and the central role of technology in the changing industry.
Standard Life has cut £60m from its technology cost projections since the introduction 10 years ago of a service-oriented architecture (SOA).
The financial services firm’s early adoption of SOA is behind the strategy to keep the IT department in-house, and has enabled a more flexible approach to the core business.
The architecture changes have produced savings in a number of areas, said CIO Keith Young.
