Nationwide transforms its core banking, service and business capabilities

Published on 17-Apr-2013

"IBM Global Business Services provided what we describe as the program management horsepower to manage hundreds of participants and stakeholders." - Richard Heeley, Programme Director, Nationwide Building Society



Deployment country:
United Kingdom

Enabling Business Flexibility, High Availability , Information Management Foundation, System z Software, Transforming Business

IBM Business Partner:


Nationwide is the world’s largest building society, the UK’s second-largest savings provider and third-largest mortgage provider. The ambition is to be just as strong in the banking market, with the launch of new products and customer-focused service enhancements in the core current-account marketplace.

Business need:
To reach a targeted 10 percent share of the UK market, Nationwide planned to attract and retain customers with new, more flexible products. Core systems were unable to meet the need for rapid development, test and launch of new products, and the Society had not offered a new current account for more than 25 years. Nationwide wanted to transform its capabilities, revitalizing its challenge to UK banks.

Nationwide chose total overhaul of its business operations, founded on SAP Transactional Banking applications, from the SAP for Banking suite of solutions. Nationwide chose the IBM zEnterprise 196 platform as the key enabler of the desired new capabilities for rapid development and launch of new current accounts. Nationwide formed a close partnership with IBM Global Business Services to help architect and manage the project, and with SAP Consulting Services and Axxiome for consultancy and skilled SAP technical resource.

Flexibility – Ability to launch new products tailored to meet demand; for example, two new current accounts in six months. Service – Stretched customer satisfaction lead over the nearest competitor. Growth – Enabled main UK bank account market growth from six to 10 percent, a 67 percent improvement.

Case Study

Nationwide is the world’s largest building society, the UK’s second-largest savings provider and third-largest mortgage provider. The ambition is to be just as strong in the banking market, with the launch of new products and customer-focused service enhancements in the core current-account marketplace.

The Society’s stated aim is to achieve a 10 percent share of the UK market for main personal current accounts, while continuing to build on its existing savings base of some 6 million customers. In 2011, Nationwide had a market share of 6.2 percent for main personal current accounts in the UK.

To achieve and maintain the 10 percent target requires significant innovation. Current account customers expect an integrated channel experience from their bank, with mobile, internet, call center and in-branch services. In addition, they expect product differentiation designed around their lifestyle, such as loyalty rewards, insurance packages, discount schemes and much more.

Existing customer service solutions at Nationwide, in common with those at many UK banks, were based on older technologies that had not been designed for a multi-channel environment.

The only feasible solution was root-and-branch transformation – requiring significant change across the Society, during which banking operations must continue uninterrupted.

Nationwide measures itself in part on customer satisfaction, and aims to be at least four percent ahead of its nearest competitor. The Society’s senior management team commissioned the banking transformation program on condition that Nationwide maintained or improved this four percent margin.

Tony Prestedge, Chief Operating Officer at Nationwide, explains: “We had three specific business outcomes that we wanted to achieve – to be the ‘challenger brand,’ based on being market leaders for customer service; to create a strong, diversified and sustainable business with improved agility and capability; and to transform our business to deliver these.”

Strategic business requirements
The first step was to set out the business requirements around long-term strategy, growth, service, and banking capabilities. At a total investment cost of more than £500 million, this was a decision that required total confidence in the program outcome. The choice of partners to help Nationwide to execute the strategy and implement the underlying systems to support it would be key. Nationwide considered vendor and self-developed software, the systems architecture, the hardware platform and a host of related process issues.

Nationwide selected IBM® Global Business Services® to partner with for the program management as a whole, with responsibility for project delivery, technology infrastructure, data center build and operations, and systems architecture. The IBM Global Business Services team provided the capacity to complete the multiple stages of the project.

Richard Heeley, Programme Director, Nationwide, comments, “IBM Global Business Services provided what we describe as the program management horsepower to manage hundreds of participants and stakeholders. The IBM team was particularly strong in providing the collaborative environment to enable every partner to maximize their specialist contribution, and ensure integration at the strategic, operations and infrastructure levels.”

IBM steered a network of specialists including Axxiome, Blueground Partners, Focus2XL and SAP, creating a truly collaborative engagement driven by shared transformation goals. The key was to build up a genuine partnership, with each organization playing to its specific strengths while contributing to the over-arching banking transformation. Given the scale of the total project, effective and proactive teamworking was critical to success, which is reflected in the hugely positive outcome achieved by Nationwide.

Phil McCabe, Divisional Director, Core Platforms, Nationwide, comments, “We understood the importance of selecting a single delivery partner. We chose IBM because we believed they had the breadth, the experience and the right individuals to drive the program forward. The people on the program were the best in the world and as the program moved on, we ratcheted up the skills, both internally and through our partners. On a five-year project, we delivered to within seven weeks of our desired time-scale.”

Integrated multi-channel banking
Nationwide selected SAP® Transactional Banking solutions, breaking away from the traditional in-house software development model followed by many banks.

SAP Transactional Banking solutions offer integrated, multi-channel banking services able to deliver flexible product development and rapid launch with streamlined processes – key issues for Nationwide.

Richard Heeley comments, “Nationwide wanted the security and commitment of a partner that is committed to the sector and offers a long-term strategy. In software terms, we wanted a real-time platform that we could buy, not build, and that was in production in other banks, all of which led us to SAP.”

The legacy systems at Nationwide were designed with branch banking in mind, and extending them to mobile, tablet, phone and internet banking had turned out to be a practical impossibility. SAP Transactional Banking solutions include support for the multi-channel operations that are now taken for granted by consumers. For the financial institution, SAP Transactional Banking solutions provide an integrated environment that delivers straight-through processing on a highly robust transaction system, and which can use transactional data to provide near-real-time analytics on customers, profitability, channel and much more.

For Nationwide, Richard Heeley describes the transition to the SAP solutions: “As more of our customers are transferred to the new system, Nationwide will become more SAP-centric, allowing us to accelerate our use of analytics to tailor our services more closely to the customers’ needs.”

Advanced banking solutions delivery
As the experts in SAP banking solutions delivery, Axxiome ensured that the SAP solution architecture met the business objectives, and that its implementation and configuration delivered the required technical performance. The Society engaged with consultants from SAP and IBM, and, to lead the technical consultancy, Axxiome.

Richard Heeley comments, “Axxiome provided the experience and expertise, based on an enviable record of successful SAP Transactional Banking implementations, that helped us steer the best course for Nationwide. In addition, Axxiome’s advanced banking framework ensured we had the right solutions in place at the outset, bringing together process, SAP software and transformational change within the overall solution.

“Specifically, Axxiome’s ability to demonstrate both the front-end multi-touch channel experience and the back-end capabilities is an asset that helps buy-in and understanding at the start of the process and has helped save time and money as a result. The Axxiome team helped us demonstrate (and therefore gave us the confidence) that what we are building is absolutely right for Nationwide.”

Phil McCabe adds, “Axxiome is a leader in its market, specializing in the configuration and development of SAP banking solutions. Acting as a trusted advisor and partner to ensure the best possible outcome from our investment in the SAP platform, Axxiome has proven excellence in the technical space and provided key resources.”

Alongside Axxiome, Nationwide relied on SAP Services to bring deep expertise for the solution itself, in tandem with the SAP Active Global Support organization. The SAP team ensured that the solution would function to its maximum performance, fully integrated with Nationwide’s legacy systems. Nationwide employed SAP Custom Delivery to specify and deploy the web services component that enabled the Society’s back-office team to seamlessly manage the SAP solution.

Always-on banking, based on reliable, secure infrastructure
For a major transformation program such as this, the choice of the underlying IT platform is almost as significant as the customer-facing results. Banking services must now meet the needs of the modern ‘always-on world’, which implies resilient, highly available solutions with a near-zero downtime architecture. The solution must integrate successfully with legacy systems until they are retired, and then be able to adapt and respond to a changing customer environment.

Richard Heeley explains, “When you are choosing a banking platform, in particular a real-time banking platform, you want hardware which has proven itself as a platform again and again for the last 40 years. Given the size and scale of the program, and the fact that millions of transactions take place each day with millions of customers, selecting the IBM System z platform was a relatively easy choice for Nationwide.

“Because, ultimately, we intend to have millions of current account holders on the SAP platform, from a business perspective, the mean-time-between-failures (MTBF) and total-availability metrics were absolutely critical parameters in our decision-making. SAP Transactional Banking solutions provide a real-time platform, which has benefits and disadvantages. A benefit is that everything is available all the time to customers, including an up-to-date balance and transactional history. The downside is that if you crash, the pain is felt by the customer base almost instantaneously. Uptime, reliability and stability were the key parameters. We didn’t want downtime unless we chose it, and we wanted scale, both of which lead us to IBM System z platform.”

Nationwide has implemented SAP Transactional Banking applications on two IBM zEnterprise 196 servers in the prime data center, clustered using IBM Parallel Sysplex.

Nationwide runs a backup z196 located at a remote data center, with IBM Global Mirror technology replicating data between the sites synchronously, providing the ability to continue operations even if the primary location is knocked out. Two IBM Power servers act as SAP application servers, with a backup server at the secondary site.

Phil McCabe describes the decision process: “The more we dug into it in terms of reliability, resilience and recovery, the more we became unsure whether other platforms could provide the capabilities we wanted for a system of this size. The logical step was IBM System z servers with data replication technology enabling us to mirror between geographically separated data centers. The production site offers 99.999 percent availability and the disaster recovery site offers 99.99 percent availability, and data replication that runs almost in real-time.”

The security capabilities of the System z platform make it a natural choice for financial institutions, and the huge scalability is an ideal match for the Society’s ambitious plans for expansion.

“Other technologies might appear to be cheaper, but we could not be certain that they would provide the customer experience and service for a solution of this scale. The IBM System z platform brings the resilience and rapid recovery we need, and ultimately offers better value. Additionally, in terms of security, auditing and the sheer discipline you need to run a major system, IBM is highly experienced and very strong at ensuring accountability and process control, which are mission-critical in this industry.”

The System z196 servers and the IBM DB2 database chosen to support the SAP applications are both new technologies for Nationwide. For each solution area, the IBM team proved that the design would work for Nationwide, and in the process made significant technical improvements early on in the program.

Phil McCabe concludes, “IBM was very hot on performance management and operational capabilities, and put in place work streams and experienced people who looked at the overall expected transactional volumes, planned performance and software capabilities. The IBM approach meant that nothing was a problem by the time we came to functional testing. From day one, we had world-class technology from IBM.”

New services tailored to customers’ demands
Nationwide has transformed its core banking capabilities, primarily through a successful transition to SAP Transactional Banking solutions on the IBM zEnterprise 196 servers. The Society has gained the ability to launch new market-leading current account products tailored to market demand, demonstrated by the introduction of two new current accounts in the past four months – and with more to come.

During the transformation program, Nationwide actually stretched its customer service lead over competitors. The underlying technology is ready to support the targeted main bank account market growth to 650,000 accounts a year, a 10 percent share of the UK market, representing growth of 67 percent.

“We could not have been more pleased in terms of delivery,” says Richard Heeley. “In terms of service, in addition to the existing FlexAccount, customers now have the opportunity to buy the pure online and telephone FlexDirect account, which is designed to become the UK’s number one credit-interest current account. Now, Nationwide also offers the added-value FlexPlus account, which includes insurance services.

“The core banking transformation program is the key enabler: the Society is able to design, launch and operate targeted new accounts in new sectors where we are aiming for market leadership. Nationwide has not had the capability to do this previously, and we are excited and fascinated about what’s going to happen.

“Along the way, we estimate that the integrated way of working enabled by the SAP Transactional Banking solutions has taken five to 10 minutes off the sales process for current accounts, which approaches 60,000 administrative hours saved in a year’s sales. We have also brought the decision-making upfront in the sales process, making it faster for customers and more intuitive for staff.”

Richard Heeley concludes, “The combined Nationwide, Axxiome, IBM and SAP team is very proud of its achievements. Nationwide now has the opportunity to compete in a way that was not possible before, and the Society is once again a serious contender in the current accounts market.”

Products and services used

IBM products and services that were used in this case study.

Power Systems, Storage, Storage: DS8100, System z, System z: System z running z/OS, System z: zEnterprise 196 (z196)

DB2 for z/OS, z/OS

Operating system:
z/OS and OS/390

IBM-SAP Alliance

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