Lloyds Banking Group to spend £3bn on tech
Lloyds Banking Group, has announced it will spend £3bn on major IT investments. The announcement has been released in the 2018-2020 Strategy and although the bank has come under fire for cost-cutting, the move towards digital transformation has been relatively well received.
As we prepare to announce our strategic priorities for the next three years with the latest #LBGStrategy, take a look back at what we have achieved over the last 3 years. #HelpingBritainProsper pic.twitter.com/rW8Y3soXeV
— Lloyds Banking Group (@LBGNews) February 20, 2018
In a trading update, the Halifax, Lloyds Bank and Bank of Scotland brands owner revealed its “business transformation” budget had increased 40 per cent on the previous year. It also reported bumper pre-tax profit for 2017 was £5.3bn, 24 per cent higher than a year earlier.
Lloyds has said it intends to “deploy new technology to drive additional operational efficiencies that will make banking simple and easier for customers whilst reducing operating costs.”
Last year, the group signed a 10-year outsourcing deal with IBM, with 1,500 staff and contractors to be transferred over. Under the deal, it plans to shift its core infrastructure to the cloud over a three year period.
This comes amid criticism the bank is looking to cut costs on staff wherever possible. Earlier this month the bank said it is planning to slash 1,000 jobs ahead of the “transformation plan” – with around 250 reported to come from IT.
However, Lloyds said the £3bn would be invested in “strategic initiatives” to create a “digitised” bank, with a simplified “and progressive modernisation of our data and IT infrastructure” and “technology-enabled productivity”. Which signals the bank is trying to adjust to the outside pressures that IT competitors are putting on the traditional banks.
The rise of fintech, especially in London, has meant that traditional banks need to invest heavily into updating current resources. The step to digitise the operations has been met with positive feedback. However, Peter Roe, analyst at TechMarketView, noted that shareholders should demand better disclosure and governance as to how technology is used, and how their money is spent.
“We can but hope that the Lloyds Banking Group management will henceforth set new standards, not only in the quality of IT investment decisions they make, but also in how they communicate them to their shareholders.”