Mitigating Risk in UK Building Society’s Payment Modernisation

When large financial institutions make any significant changes to their tech setup, they need a bulletproof plan for minimising as much risk as possible. Change always has the potential to have an impact on business, and that makes it necessarily risky. While all businesses have to be aware of this, there’s really no margin for error when it comes to dealing with financial transactions.

This major UK building society serves more than 16 million members, and is one of most trusted names in the UK banking industry.

When the organisation set about on a large-scale re-engineering project to modernise their payment systems, one of the key requirements was to ensure that all new cloud developments would be deployed at minimal risk to the business, with robust failsafe systems in place to prevent any payment processing failures.

Modernising the payments platform – plan A

This building society’s payments platform has been largely unchanged since 2011. As part of a large modernisation project that involved moving to a new greenfield cloud development, the business elected to adopt a cloud-based Payments-as-a-Service model.

Following an assessment phase, the building society identified a third-party provider whose solution would meet their requirements. The implementation of this new Payments-as-a-Service system would represent the building society’s “plan A” approach to payment modernisation.

As part of the due diligence around the project, it became clear that some contingency work would need to be done to reduce the risk of implementing the solution.

That contingency work would require a project in its own right. For this “plan B” risk-mitigation project, the building society selected 345 Technology as its tech partner.

Helping the building society to mitigate risk – plan B

At 345 Technology, we have a track record of working well with this major UK building society since 2009, and in fact we helped to construct the incumbent payment platform that was the focus of the modernisation work.

This original system was fit for purpose in its time, but, having been designed for an on-premise world, it isn’t ready to make the leap to the cloud and therefore requires modernisation.

Our challenge was to consider a viable alternative for the Payments-as-a-Service solution, in the event that this plan A route should fail. The aim was to develop the existing payments platform to remove existing operational deficiencies while retaining the maximum amount of valuable intellectual property for the building society.

We developed a target solution that breaks down into 37 separate systems and 76 subsystems, supporting Faster Payments, CHAPS, BACS and internal payments. We then assessed this target solution against the plan A project proposal for the Payments-as-a-Service.

This comparison revealed that the product offered by the third-party provider would constitute only about 30% of the solution that they actually required, with them needing to develop the remaining 70%. This might sound like a criticism, but in reality it isn’t.

As is often the case when a business looks to improve its systems, integrating a new component alone is unlikely to be sufficient to ensure the success of a project. If we think of such systems as a jigsaw puzzle, the new piece – however good it is – still needs to fit in with everything else if the whole is to function correctly.

Our assessment involved analysing all the capabilities that would be required in the new system, including:

  • managing exceptions
  • updating ledgers
  • generating reports
  • making dashboards

We reviewed what was being used to provide these and other capabilities now, to see what could and couldn’t work with Payments-as-a-Service. This work revealed that some significant modernisation work needed to be done to support the success of the plan A approach.

We also needed to plan for the scenario where Payments-as-a-Service simply didn’t work at all, so that we could mitigate the risk of a major project failure that would surely cause severe reputational damage to the business.

Application Modernisation

Putting the plan into action

The building society was happy with our proposal to work on a project that would allow us to de-risk their plan A for implementing Payments-as-a-Service. This involves us carrying out the following work:

  • Analysing their current BizTalk platform, including the major workloads and logical components.
  • Defining a suitable future technology stack for the payments platform and identifying the major subsystems.
  • Analysing the migration/refactoring work required to move existing code into the new blueprint.
  • Defining the migration strategy, as this work may need to be undertaken in incremental stages.
  • Defining the test strategy for the new platform and what elements of the existing test pack can be migrated.
  • Investigating other opportunities provided by current technology, such as analysis and dashboarding.

The design phase for the de-risk project took us 2.5 months to develop, but the implementation of the building society’s larger payments modernisation programme will be carried out over a period of years.

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