Lloyds Banking Group has opted to build its new cash management and payments platform on top of SAP's in-memory HANA database technology.
With the real-time cash management and payments platform, Lloyds is looking to give large corporate and institutional clients quicker access to cash management and payments infrastructure by building a more open, API-enabled platform with self-serve analytics on top.
This will provide clients with all UK and core international payments, including Swift, real and virtual client accounts, and payables and collections.
The platform itself will be a lightly customised mix of SAP technologies, primarily the SAP Omnichannel Banking solution, which was given a major upgrade in January 2017, all backed by the vendor's in-memory HANA data store. This specifically includes SAP Deposits Management and SAP Payment Engine applications.
The platform will be hosted in an on-premise private cloud instance from Lloyds' new cloud partner IBM. The bank signed a £1.3 billion, 10-year deal with the vendor in June.
Lloyds is building this capability from scratch in response to what it says is a clear need from its clients for a more self-serve platform.
As we wrote back in April, the retail bank is already preparing for the upcoming open banking regulatory changes by getting its data architecture ready to expose transactional data to customers as close to real-time as possible. Now it would seem the rest of the bank is looking for ways to leverage this more open, real-time approach to help larger clients.
The vendor selection process came down to a shortlist of three, who weren't only subjected to standard paper-based assessments, but were also asked to come into the bank and essentially pitch their solution to senior staff. SAP clearly passed with flying colours.
David Ellender, cash management and payments product lead on the innovation team for Global Transaction Banking at Lloyds Banking Group wouldn't be drawn into saying who the two losing vendors were in the end, but explained that SAP eventually won the contract because of its ledger capability, its proven integrations at other financial services organisations and "the breadth of capability SAP had aligned to the market segments we went after, so financial institutions and global corporates and top end of mid-market".
Ellender was also impressed by SAP's commitment to an API-enabled architecture "out-of-the-box" for clients asking for access to financial data in real time.
Gareth Ainsworth, lead IT architect for Global Transaction Banking at Lloyds added: "This is aiming for a new book of business and the existing technology didn't support the high volume transaction flows required. The profile of traffic is fundamentally different to retail flows and the existing systems simply wouldn't support it."
Rob Hetherington, global head of financial services industries at SAP, said at the time of the announcement at the Sibos conference in Toronto earlier this month: "Banks must provide not only first-class product functionality but also ease of consumption through open application programming interfaces (APIs) as well as being flexible to meet customer expectations.
"By supplying real-time cash management, payments and analytics capabilities coupled with an API-based architecture, SAP is committed to helping corporate banks, like Lloyds, harness innovation to deliver unparalleled experiences."
Lloyds appears to have bought into SAP's line of thinking that by giving clients a self-serve platform for cash management and payments they can not only help their own margins, but also give those clients a much faster route to market.
Ellender, who previously modernised the cash management and payments infrastruture at Barclays, was happy to start from scratch from a technology perspective for this project.
The bank started the detailed design and build process in January and is now setting the build timeline, which Ellender pegs at between 30-36 months, however there will be "interim releases to give capability to clients" while the bank iterates as it goes.
"One of the key things is having an open architecture," Ellender said. "It means nothing constrains us going forward and where other banks have to keep building, we start with a clean infrastructure and architecture for data and the channels out to the client."