Nationwide Building Society has embarked on a project to move all of its payments onto a cloud-based platform in its latest “generational tech transformation”.
In 2008, in the fall out of the collapse of Lehman Brothers, which brought the global finance sector to its knees, Nationwide Building Society set out its stall to be a digital leader. Since the £1bn transformation that followed, the organisation has been hailed a digital leader in an industry known for pioneering the use of IT.
Nearly a decade and a half later, the building society is going through another generational transformation, according to its payments director Otto Benz.
Reflecting on Nationwide’s digital transformation over the past decade, Benz said Nationwide has done a lot of technology investments over the years and now is the time for its payments to be transformed.
“The payment platforms were developed from scratch in the 2000s when a lot of investment went into the core banking and payments platforms. Since that time, we have had great growth in the use of our current account services. About five or six years ago, the building society realised it needed to do another generational transformation of its payments platform,” he said.
He added that an outage experience by the building society in March last year, which left customers unable to pay bills on payday, was unacceptable and “re-emphasised the need to renew payments platforms”. The outage occurred during an upgrade to a legacy platform.
“They were old, on-premise and when you upgraded it wasn’t safe enough,” said Benz. “We need to provide a service to our members which is resilient. The most important thing about payments is that when you make a change and create great new facilities, nobody notices,” added Benz.
Nationwide decided to rebuild its payments platform to make it more resilient and chose cloud technology from Form 3. The supplier’s platform is already used by dozens of banks, which typically connect to the software-as-a-service (SaaS) platform through application programming interfaces (APIs). Nationwide transacts 450 million retail payments a year.
Benz told Computer Weekly that all the building society’s payments will eventually be moved onto the platform. It is working with Accenture on a gradual migration, starting with putting inbound payments on the platform this summer and outbound payments next year. “We intend to use the platform further, but our first priority is to migrate carefully our faster payments, both inbound and outbound,” said Benz.
More than 100 people from Nationwide and Accenture are working on the project. “It is a large project. From our side, there is lots of integration work, we have to make it secure and we are very, very keen to make it resilient and transparent when we migrate our members across. We are doing a very gradual migration with a lot of focus on it so there is no member impact.”
Benz said the migration is a major project for the organisation, and has the full backing of chief operating officer Suresh Viswanathan, who is committed to the project. Viswanathan joined Nationwide Building Society from TSB, where he had been brought in to help restore TSB’s reputation for IT in the aftermath of the IT disaster.
An industry melting pot
As well as the need to ensure that payments outages are minimised or even eradicated, the migration is also driven by industry change.
In 2008, when Nationwide embarked on its £1bn digital transformation journey, it was the changes in the industry that drove it. Nationwide set itself the challenge to use technology to increase its speed to market for new products, provide agility in developing propositions and products and improve efficiency.
Despite the 2008 financial crash occurring just after the company launched its massive transformation, it decided to stick with it. While global financial firms were slashing costs, cancelling projects and laying off thousands of staff, Nationwide continued to invest heavily in tech.
At the time, then COO Tony Prestedge told Computer Weekly that IT needed investment to meet customer expectations and to be more efficient: “There had been under-investment in the business for a long time and we were in no different of a place to any other bank during that period.”
What has come since, in the form of rapid fintech adoption, has justified Nationwide’s decision to continue with the project.
It’s decision to renew its payments platform, core to any finance firm, is also a well-timed move, according to Sulabh Agarwal, global payments lead at Accenture, which is working with Nationwide to deliver the project. He said an industry “melting pot” makes now the right time for Nationwide to move payments to the cloud.
“In terms of the drivers, there’s the increasing volumes of digital payments across the world, with customers demanding more and new regulations coming in demanding things like new message formats,” he said. “Also, the technology has moved on and now we are talking about cloud native and scalable cloud infrastructures.”
Michael Mueller, CEO at Form3, said that all of the benefits of cloud-native technology seen in other industries is now arriving in banking – in particular, in payments and back-office processing.
He added that it is required as customers in the digital age become more demanding: “If you look at banking apps today, there is a lot more functionality, a lot more you can do with payments. The expectation of customers today is that it works 24 hours a day, 365 days a year, in real time.”
Form3 already has several banks as customers, and Mueller expects now to be the time when more move their payments infrastructures to the cloud. “As payments move to real time, banks are moving to payments infrastructures that are hosted in the cloud,” he added.