it right: the RBoS/NatWest takeover
Royal Bank of Scotland took on one of the
biggest integration challenges ever when it bought NatWest
The complexity of the RBS/NatWest integration programme illustrates
the huge challenges major banks face when they merge. When
RBS took over NatWest it committed itself to a gigantic programme
of integration aimed at delivering the shareholder value promised
to justify the deal. It had to integrate hundreds of proprietary
systems as well as take control of much larger operations
– both in retail and wholesale markets. Although our
case study focuses on the integration of retail systems, it
highlights the extent of the issues banks in any area of the
marketplace face following a merger. Quite simply, it is a
case of good practice – which is always worth examining,
wherever it occurs.
At one stage, RBS had 4,200 staff working on IT integration.
They were led by John White, director, group technology. The
decision-making hub was the technology integration directorate
(TID), whose role was to guide the programme and make quick
The key decision was to migrate the NatWest customer database
over to the RBS systems as quickly as possible. This was a
huge challenge as NatWest was a substantially larger bank.
However, RBS did not want to run the risk of being stuck with
dual systems into the medium term. The critical factor was
that the bank had an environment that could scale up to meet
the volumes required. Without that it would have been compelled
to introduce a completely new system. That would have entailed
enormous direct costs as well as the ongoing indirect costs
involved in running dual systems.
The conversion was made during a single weekend in October
2002. More than 9,200 milestones were tracked, with 120 systems
monitored and 1,168 business checks. Over the weekend, 4,200
people were involved, covering the business and group technology.
As part of the process:
• The bank had to scale up 200 RBS systems to process
five times the previous transaction and data volume.
• Migration of the RBS mainframe systems to the group
software infrastructure – the new production environment
built to hold the RBS Group IT systems. This also involved
the migration of 644 RBS branches, 5,100 ATMs, 5.5m customer
accounts, and 10 terabytes of storage capacity.
• A new branch teller system was rolled out into 1,512
NatWest branches involving 6,005 workstations and training
for 12,000 staff. An enhanced platform called Early Sales
involved rollout to all 1,524 branches (2,239 workstations).
• The bank converted 3.8m RBS cardholders from First
Data Europe (FDE) systems to Total Systems (TSYS). Some 4.4m
NatWest cardholders were also moved on to the same system.
A total of 14.6m debit cards were transferred to the RBS platform.
RoyNet merchant customers were moved onto the Streamline platform
and over 20,000 bank-owned card acceptance terminals were
removed and replaced with new state-of-the-art machines.
• All 3,345 NatWest ATMs were migrated to the RBS platform
at an average of 250 per week or around 50 migrations per
• NatWest internet banking customers were transferred
to the RBS platform which increased the total Internet customer
base on this system to 1.4m customers.
• RBS consolidated four data centres in Edinburgh and
the Midlands occupying 96,000 sq feet to two in Scotland,
occupying 45,000 sq feet. The process included the acquisition,
fit-out and commissioning of a new 27,300 sq feet data centre.
Within 942 days both RBS and NatWest were running on the
single RBS Group IT platform. The bank had promised shareholders
an IT saving of £350m per annum following the merger.
The outcome is estimated to be £400m.
Royal Bank of Scotland’s IT integration
programme is shortlisted for the Most Innovative Application
of Technology Award in the BT/ifs Innovations Awards taking
place on 27 November. For more information about the Innovations
here or for a full list of the nominees click
Read more about how BT restructured
its own data centres in TRANSITIONS 4, Building