Exposed: Lloyds’ video bombshell as staff are told bank IT system is ‘unfit for purpose’
- Mail on Sunday has obtained a the recording of an internal meeting
- Staff is warned about the bank’s existing on-site technology
- Lloyds is working on updating its old technology and moving parts of it cloud
A senior Lloyds banker has warned that some of its technology is ‘not fit for purpose’ for the future and ‘a real concern’, a leaked video obtained by The Mail on Sunday has revealed.
The recording of an internal meeting shows one of the bank’s directors, Nick Williams, answering employees’ questions about its technology – a major focus under new chief executive Charlie Nunn.
The Mail on Sunday understands that the FTSE 100 banking giant is working on a secret project codenamed Voyager, which is aimed at updating its old technology and moving parts of it – including customer data – on to the cloud.
Warning: Lloyds director Nick Williams in the leaked video
On the leaked recording, Williams can be heard warning staff about the bank’s existing on-site technology which he said still supported the vast majority of Lloyds’ data and services.
Williams speaks of the ‘on-premise’ software – which is installed and run on computers on the bank’s own premises rather than at a remote facility such as the cloud.
He said: ‘The bottom line is our prem [premises] capability today is not fit for purpose. So we’ve got to sort that problem out as well. We do need to move them forwards. The age of our estate is a real concern.’ He estimated that ’99 per cent’ of Lloyds’ data and services is hosted on the bank’s own servers.
Williams’ comments underscore wider concerns that some of Britain’s biggest banks are using outdated technology that is vulnerable to disruptions, cyber attacks and outages. There is no suggestion that Lloyds’ technology is not robust. A source close to the bank said it has one of the lowest outage levels.
We’re still stuck on the ageing infrastructure
The Bank of England has been increasing its scrutiny of the technology used by banks amid fears that meltdowns could result in the destabilisation of the wider economy. The central bank looks at technology as part of banks’ ‘operational resilience’ – the ability to overcome disruptions to services.
TSB, which was carved out of Lloyds in 2013, suffered one of the biggest ever technology collapses after the bank attempted to shift customer data on to the systems of its Spanish parent bank Sabadell in 2018.
The IT catastrophe left thousands of its customers temporarily locked out of their accounts and led to a full-blown inquiry by law firm Slaughter and May. The debacle cost the bank a staggering £330million and pushed it into the red.
Debbie Crosbie, a former senior banker at Clydesdale and Yorkshire Banking Group, was parachuted in to sort out the mess. She managed to return the bank to profitability after slashing costs.
TSB suffered one of the biggest ever technology collapses in 2018
NatWest was hit with a record fine in 2014 after a major IT problem left millions of customers without access to their accounts.
Banks are keen to move on to slick technology to cut costs, especially in an era of low interest rates which stifle profits.
Lloyds’ previous chief executive Antonio Horta-Osorio kept a very close eye on costs. Nunn, who joined the bank from HSBC in the summer, is expected to reveal his new strategy for the bank when its annual results are announced in February.
A substantial technology upgrade could be on the cards along with plans to expand both the bank’s wealth management business and its recent push into the private rental market.
In the leaked video recording, Williams warned his audience that the operation to switch to updated technology will definitely not be simple. He said: ‘To move forwards and progressively modernise and simplify what we’re doing, we’ve got to move on to a more modern architecture.
‘That’s not just a case of let’s go and buy new hardware.
‘Quite a lot of the reasons why we’re still stuck on the ageing infrastructure is because the applications won’t work on new hardware, so it’s very much a collective effort.’
Mark Brown, general secretary of trade union BTU, said: ‘Given the billions the bank’s invested in IT over the years, for a senior executive to be forced to admit that the bank’s current on premises IT infrastructure ‘is not fit for purpose’ is both astonishing and deeply worrying. But he should be commended for his honesty.
‘The question Mr Nunn needs to answer is how much money is the group prepared to invest to make its IT infrastructure fit for purpose?’
Lloyds said: ‘We continue to modernise our technology infrastructure in order to retain our leading UK customer position and our cost leadership in an increasingly competitive operating environment. This aims to deliver increased agility and responsiveness to customer trends, while supporting our broader strategic priorities around customer services and products and operational efficiency.’