David Anderson, CEO of Co-Operative Financial Services, is faced with overseeing the organisation's core banking overhaul in parallel with the integration of the UK's second largest building society, Britannia. Writer Michelle Price

The UK retail banking industry is under siege and not merely at the hands of the financial crisis. Even before the meltdown, trust among UK banking consumers, disgruntled with poor impersonal service, overly complex products and stealth penalty charges, was on a steady downward trajectory. One organisation that remains on a high, however, is the Co-operative Financial Services (CFS) group. Buoyed by strong ethical brand values that are proving uniquely appealing to a disillusioned public, the organisation is growing fast: in the first quarter of 2009, the Co-operative Bank enjoyed a 49% year-on-year increase in current account customers, says the group's CEO, David Anderson.

But although CFS does not exist to maximise shareholder value, the organisation is not immune to growing commercial pressures. "We need to do what the market is doing," says Mr Anderson, who has identified two key technology-driven capabilities that will prove central to the organisation's continued growth: the ability to bring new products to market in a tight timescale and that other much-sought-after differentiator - a "stronger relationship" with the customer. "This means being able to recognise the entirety of a customer's relationship with you and having much slicker processes when you interact with the customer," he adds.

Biting the bullet

CFS's ambitions have outgrown its existing technology stack, however, some of which is more than 30 years old. Two years ago, the organisation envisaged that a major technology overhaul would be necessary if it was to remain competitive, says Mr Anderson. "It dawned on us that it would cost us much more money and take much longer to adapt what we have rather than to bite the bullet and take on a major programme and move to a packaged solution," he adds. To this end, CFS has partnered with Infosys Technologies, whose core banking platform, Finacle, will underpin CFS's business transformation programme. Using the Finacle suite, CFS will replace a number of systems across its back-office and front-end channels within its retail banking and corporate banking businesses.

But while CFS had anticipated that a core banking overhaul would be necessary, it had not anticipated the project coinciding with the integration of Britannia, the UK's second largest building society. The merger, which will create the UK's biggest mutual, will unavoidably influence the implementation timescale. For Infosys Technologies, whose core banking product is not yet well established in the UK, the CFS deal will require adapting the Finacle system to the UK market. But the more substantive issue of accommodating the Britannia merger is not an unfamiliar challenge. Nandan Nilekani, the co-founder and co-chairman of Infosys Technologies, who has been working closely on the CFS project, says the company recently rolled out its core banking platform across a Dubai-based banking merger.

This experience will prove critical while both parties reassess the phasing of the project. Mr Anderson, who is the project's chief sponsor, says that the implementation team, which is spread across both Bangalore and the UK, will have to rethink parts of the data migration process. "That's probably the most difficult part. In some ways it is easier to start from scratch at Britannia, where they don't have any current accounts and no data to move, than to move our existing technology onto the Finacle platform. It raises the question: is it better to wait to deploy Finacle in Britannia once we have migrated our own accounts or is it more effective to give Britannia something that is ahead of what we have in our own business?"

All coming together

Whatever the eventual outcome, the key pieces of the system will be operational by 2011, with the end goal being to move the whole, newly merged entity onto the single core platform, says Mr Anderson. "Ultimately there will be only one core platform and it will be Finacle." He believes that CFS's new capability will better enable the organisation to fulfil its ethical brand values, namely fairness and good value, by allowing the bank to be "more creative" in its pricing. "Banks are used to very blunt pricing decisions and very blunt product structures that take a long time to change," he says. With a technology infrastructure that allows the bank to create tailored products at high speed, CFS will be able to provide its customers with "fairer solutions", he says.

In what is undoubtedly a "huge change management programme", says Mr Nilekani, the strong governance provided by Mr Anderson is a good indicator of success. As such, it is clear that Mr Anderson, a rarity among business leaders, takes a keen interest in the nuts and bolts which allow his organisation to function. "It is at the heart of the business," says Mr Anderson. "Financial services is totally dependent and enabled by technology: if you don't pay attention to that, you fall off the pace."

cp/56/Anderson David.jpg

David Anderson, CEO of Co-Operative Financial Services

Career history

David Anderson

2005 - CEO, Co-operative Financial Services.

2003 - CEO, Jobcentre Plus, Department for Work and Pensions.

1996 - CEO, Yorkshire Building Society.

1987 - Marketing director, Yorkshire Building Society.

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