Lloyds TSB signs £500m outsourcing deal with IBM

Lloyds TSB has signed a £500m seven-year deal with IBM to boost its voice and data network in a move that will see 80 staff transferred to the consultancy giant.

The year-in-the-making deal has finally emerged after contract wrangles with current suppliers delayed its original 1 October target, as reported in silicon.com in October.

IBM Global Services and virtual network operator Vanco will provide a high-capacity DSL and MPLS connections for the bank's 2,000-odd branches and its network of 4,200 cash machines. The high-speed fibre network will now come from Vtesse Networks.

Igor Andronov, director of IT at Lloyds TSB, said: "At the moment, we have a large number of suppliers for both voice and data. This will consolidate it into a single service. It's a large undertaking, but I think a lot of people are beginning to do this. We want to make our services consistent across the network and a unified backbone helps."

The new system will include almost 70,000 VoIP telephones but will not include the Lloyds call centres. Andronov said: "The call centres are separate and we're happy with the arrangement. The system is virtualised and now we will be able to transfer voice and data from the call centre net to our own if, say, the customer calling would be better off being dealt with by someone in the bank."

Part of the deal will allow Lloyds to use incremental bandwidth on demand and gain flexibility in its use of various business processes. Andronov would not be drawn on any future banking products but said that the new capacity could allow the bank to use video for internal training and distribution.

He said: "We will have the option of actually cutting our costs or of adding new services. Our unit costs will be down and it will be easier to maintain and support. It's the 21st century solution."

The new system will be rolled out over the next 20 months.