Why Leeds Building Society migrated its core banking platform to the cloud

Leeds Building Society pioneers a shift to HP's Helion cloud as regulatory demands intensify and customers expect more flexibility

Leeds Building Society has completed the migration of its banking platform, currently hosted by provider Yorkshire Building Society, to the HP Helion cloud.

It follows a deal struck last year between HP and Yorkshire Building Society to create a "shared services alliance", based on Yorkshire's technology, that will see the British-designed mid-tier banking platform rolled out as a private cloud-hosted service to financial services organisations across Europe by the US services giant.

For Leeds Building Society, the shift to a cloud service, managed by a third party, will enable it to concentrate on its core savings-and-loans business, as well as focusing its IT activities more squarely on the needs of customers, rather than in-house and regulatory demands.

"There had been a view that we ought to bring our platform in-house, but this was reversed and we decided to go with HP," says Leeds Building Society CIO Tom Clark. In mid-March, Clark's 100-strong IT team conducted a dry-run - before completing the shift on 20 April, closing branches the previous Saturday to make sure that the transition went ahead without any glitches.

Leeds's move comes as a combination of increasing regulation and competition continue to shake up the financial services industry. According to some analysts, banking is on the brink of a market-led revolution, with barriers to entry slashed and new rivals emerging: not just in areas like payments, where Apple Pay and Paypal represent a competitive threat, but even in the core activity of savings and loans. Technology, they argue, threatens to disintermediate the "middle man" in the shape of the bank or building society.

So, when HP acquired the banking platform used by Leeds Building Society, it represented both a threat and an opportunity: HP wanted to use the banking software, which had been developed by the Yorkshire Building Society and shared with HP under a "shared services alliance", as the basis for a Europe-wide push into the mid-tier banking sector, just as such organisations need to examine how they can cut costs and improve their IT and business agility.

For Leeds Building Society, meanwhile, it offered the opportunity of shifting its banking platform to a private cloud hosted in HP's Helion cloud in order to better focus on its 721,000 members, not to mention potential new customers. They are served out of 65 branches across the UK, from Aberdeen to Southampton, as well as a branches in Gibraltar and Dublin. "Nothing should change. Our customers and our staff shouldn't see anything different," says Clark, speaking to Computing in advance of the shift in March.

The migration was planned in such a way that if there was any reason whatsoever to abort the shift, the organisation could do so without consequence, right up until 20 April. "We continued running on the Yorkshire system until we were ready, and the quality of the migration could not be compromised" says Clark.

Part of the reason for the move, in addition to improving the organisation's overall agility, is enabling it to focus better on providing value-added services rather than maintaining everyday infrastructure. HP can also focus resources and expertise on managing the regulatory aspects, relieving the Building Society of the IT side of this increasing challenge.

"It takes us to a much better place. One of the priorities from a financial services perspective is about resilience - the ability to maintain service in all circumstances. To move to a cloud solution that is designed to provide a high level of resilience is hugely attractive to us," says Clark. With expertise concentrated under HP, furthermore, it ought to be able to run it more smoothly.

More importantly, the shift and the ability to focus resources will also enable the Building Society to develop new and better online and mobile apps for customers.

"Today, we have some internet capabilities in terms of what customers can do online. We have the branch network, we have the contact centres. Where we want to go, though, is much more 'omni-channel', where customers can choose how they wish to work with us.

"That might be in branch or online, mobile or telephone, while still receiving consistent and excellent customer service, regardless of their chosen channel. Customers' expectations are changing based on the experience they have from the best of the retailers."

As a result, the cloud shift won't see Leeds shed staff, but quite the opposite: Clark plans to increase staffing from 100 to 124 this year, as part of plans to create 100 new jobs across the business, so that more developments, especially in mobile and online, can be done.

And the cloud shift by Leeds Building Society is expected to be among the first in a slew of deals across Europe by mid-tier financial services providers looking to cut costs and improve their IT flexibility. On top of that, Leeds's implementation is based not far from its head offices in Yorkshire and, if successful, should mean more high-tech jobs in Yorkshire and the North-East.