ABN Amro, Barclays: Data centres on savings hit-list

The merger between banks ABN Amro and Barclays will see the consolidation of both companies' data centres and IT networks to realise cost savings of €1.65bn by 2010.

Both company's retail and commercial banking branches will be merged. The goal is a universal banking model that includes the use of best practice offshoring, improved procurement and the consolidation of data centres and supporting IT networks, the companies have said.

Daniel Mayo, director of financial service technology at analyst house Datamonitor, told silicon.com one of the biggest challenges for both companies will be overcoming the geographic differences between the two - with Barclays' retail data centres based in the UK and ABN Amro's in the Netherlands - particularly if applications are being run between the two locations.

A Barclays spokeswoman told silicon.com both companies will combine IT systems and use existing infrastructures where it's appropriate to reduce costs.

silicon.com Financial Services

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Datamonitor's Mayo said the two companies have different sourcing strategies - with ABN Amro choosing to outsource its IT to a selection of vendors - and a key question will be whether Barclays wants to bring this back in-house or stick with ABN Amro's outsourcing route.

Mayo added: "I expect some of the offshore development and back office functions may be brought back into Barclays."

Keith Brookes, a national official from union Amicus, which represents Barclays staff, said the merger is about creating a global bank that is headquartered in Europe.

ABN Amro multi-outsourced its IT infrastructure and application development 18 months ago to Indian companies such as Infosys, Patni and Tata Consultancy Services as well as usual suspects Accenture and IBM.

Barclays signed a £450m IT outsourcing deal with Accenture in 2004 that saw hundreds of jobs moved to India. Barclays also cut 500 jobs as more IT was outsourced in 2005.

AMN Amro and Barclays declined to reveal which data centres will be affected by the merger.