Dunfermline Building Society still banking on Temenos!

(By Anthony Miller – Monday, 30th March 2009 6:30pm). The interesting side story to the collapse of Dunfermline Building Society (DBS) is the contribution made by “unfortunate decisions on technology” as mooted in today’s FT (see here). The article reports that DBS was forced to make a £9.5m write-off on last year's £11m profits because of a failed IT system. This echoes an intriguing article in Scotland’s The Herald newspaper a few days ago (see here) which suggested that DBS had ploughed £31m into its IT subsidiary, Dunfermline Solutions.

When I followed the trail, I came across an article in the IBS Journal (see here) which explained that DBS had signed a deal back in 2002 with Switzerland-based banking software firm, Temenos, to implement its Globus banking product (since superseded). IBSJ thought DBS’s choice risky, saying: ”While Darlington (another building society referred to in the article) has opted for a tried and tested solution, Dunfermline Building Society is doing the opposite, having signed for Temenos’ Globus at the end of 2002. This will be the first UK building society to use the system, but the Dunfermline is confident of its applicability, to the extent that it has created a subsidiary company with the intention of marketing the system on an outsource basis to other societies once it is live.”

I spoke to Temenos and understand that DBS signed a new contract with Temenos in Feb. 2008 to implement Globus’ successor product, T24, and that this system went live successfully in November. It is not clear whether Globus itself ever went live at DBS, although it was apparently only part of a much larger and ambitious IT programme. I suspect that DBS’ new owner, Nationwide, would likely continue with T24.

It’s really hard to say what contribution the failed IT programme made to DBS’ collapse with such scant information. Was there a problem with Globus? Or was it just that DBS management were so dead set trying to turn Dunfermline Solutions into a third-party outsourcer that they forgot who was actually paying the bills? Temenos has a pretty good reputation with T24 as far as I understand. Indeed, IBS ranked T24 top in its 2008 Sales League Table of core banking system sales for the second consecutive year. I’m sure we will be hearing more.