Lloyds Banking Group is set to agree a £1.3bn contract with IBM to outsource many of its computer systems and shift more than 1,900 jobs to the US IT services provider.
The seven-year deal, which is opposed by some trades union officials, is designed to cut almost £760m of costs while making the bank more nimble and responsive to changes in technology.
It could add to worries about the vulnerability of Lloyds to cyber attack after the UK’s biggest high street lender by market share suffered a hacker-instigated outage to digital services that lasted more than two days this year.
Lloyds Trade Union, which is no longer recognised by the bank, said in its newsletter to its 35,000 members that staff transferred to IBM would be kept on for a year but most would be laid off within four years and replaced by cheaper, offshore workers.
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Citing a presentation given by Morteza Mahjour, Lloyds’ chief information officer, the union said 1,961 staff would be transferred to IBM, mostly from Lloyds’ data centres in Copley, West Yorkshire, and Edinburgh. It said the transfer of staff had been agreed by the in-house staff unions Accord and Unite.
But the LTU claimed the IBM deal had been criticised by “senior managers and head of functions in IT, concerned that critical systems which underpin the bank’s major payment, treasury trading, settlement and digital services are being outsourced to a third party to eventually be run offshore”.
“Even the bank admits that the migration of the accounting details of 20m customers on to a private cloud to be run by staff based offshore could ‘weaken existing security controls and adversely effect the confidentiality and integrity of bank data’,” it said.
Lloyds plans to transfer 1,961 people, including permanent staff, contractors and third-party service providers to IBM, the LTU said. Citing a chart from Mr Mahjour’s presentation, the union said only 193 of the staff would still work on the Lloyds contract after four years. The bulk of the work would be done by 993 staff based offshore.
The bank said: “As we have said to our colleagues, we are considering options to extend use of cloud technology in pursuit of the group’s aim to be the best bank for customers. We do not comment on speculation and, if any decisions are made, they will be communicated to our colleagues first.”
The IBM deal is the brainchild of Jacqueline Guichelaar, who organised a similar project at Deutsche Bank with Hewlett-Packard before joining Lloyds last year as chief information officer for infrastructure technology services.
In January, Lloyds was hit by a “denial of service” attack, which involves swamping a website with traffic in an attempt to disable it. The outage affected Lloyds and its Halifax and Bank of Scotland brands, leaving many customers temporarily unable to use services such as checking their balance or sending payments.
No customers suffered a financial loss. TSB, which was carved out of Lloyds in 2013 but still uses its technology platform, was also hit.
Date: March 13, 2017