Lloyds bank is planning to move 500,000 customer accounts from its Intelligent Finance division out of its legacy IT onto a cloud-based banking platform built by Thought Machine, according to the FT.
Intelligent Finance is a sunsetted business which services existing customers and doesn't take on new ones.
Back in November, Lloyds announced a partnership with and 11 million investment in Thought Machine, as part of an initiative to accelerate the banks' digital transformation.
Zak Mian, group director of transformation at Lloyds Banking Group, said at the time: "A key part of our recently launched three-year strategic plan is applying technology innovation to meet our customers' evolving needs.
"I'm really excited to work with the Thought Machine team to explore ways to simplify and enhance our IT architecture and helping on our journey to make banking easy and simple for customers."
The downside of this digital transformation is that while it's cutting costs, it's also costing jobs. Lloyds has already axed over a thousand of its employees in the last year in two redundancy rounds and now its legacy IT is getting the boot, so will more people whose job it is to maintain those systems.
Lloyd's bank has declined to comment on the matter.
Back in November 2018, Lloyds announced that it would cut 6,000 jobs and create 8,000 new digital jobs in the process, with 75% of those affected expected to move into those new positions.
Some specialist roles will also be recruited externally, such as data scientists and software engineers. The bank confirmed that no branches are planned to close due to the changes.
"Lloyds Banking Group will create an additional 2,000 roles, as it strengthens its capability to offer customers new leading-edge digital banking products and services," a spokesperson said at the time.
"The Group is investing to further digitise the bank and will refresh some existing roles and create new roles within its structure, while also providing comprehensive retraining for colleagues to help them build their capabilities to meet the demands of these future roles."
From a business perspective, migrating away from legacy IT is cost-effective and better for security, something that is of paramount importance to all banks.
"It is the legacy that gets you," said TalkTalk former CEO Dido Harding referencing the risks of outdated IT in cyber security.
Maintaining these outdated systems could account for up to 80% of a bank's IT budget and in Lloyds's case, it could save them 750 million in annual IT costs, according to the FT report.
BTU general secretary Mark Brown said to the Telegraph: "What they are building is a completely new IT system, and that won't need anywhere near the number of people that are involved in the current IT system.
"If it works and doesn't collapse, it is going to completely change retail banking," said Brown.
Many in the banking sector fear further job losses to more efficient tech, especially after the news this week that Santander will close 140 of high street branches due to customers' evolving needs and preferences towards online and digital banking.
It said that branch transactions fell 23% while digital banking transaction increased 99% last year and figures from the Office for National Statistics show that nearly 6,000 local branches have shut since 2010 which is a fall of a third.
