Deal is said to be one of the largest cloud transformation deals in the financial sector.
IBM is said to have signed a huge 10-year cloud outsourcing deal with Lloyds Bank.
As part of the deal Lloyds Bank will send 1,500 staff and contractors to IBM, according to an internal memo seen by The Register.
The deal is said to have been long in the works and may have been triggered by a series of outages that the bank suffered in January, perhaps forcing the banks hand to seek outside help for managing its data centres.
Lloyds Bank reportedly announced to its staff that it has, “signed one of the largest cloud transformation deals” within the financial sector, apparently by shifting to IBM’s private cloud over the next three years.
The memo said: “Most colleagues working in Infrastructure Technology Services supporting these systems and delivering change will transition to IBM, with a number retained in Lloyds Banking Group to manage the relationship, service and governance of IBM.”
500 staff from Lloyds will move to IBM at the start of September this year, with around 1,000 contractors that support the Lloyds Banking Group also moving to support IBM.
This does not signal the end of the bank’s IT Group, with the bank saying there will be “a substantial retained organisation” in the Groups IT function. These employees will continue to provide services and manage the cloud transformation.
Morteza Mahjour, group CIO, said: “As customer demands change and innovation in the industry gathers pace, having a more modern and agile technology platform will help us lay the foundations for the next phase of our strategy.”
The move, if true, makes sense for Lloyds given the growing pressure on banks to provide more digital products.
Read more: From “too big to fail” to too small to care: Why the CMA needs to be careful not to kill banks
The Competition and Markets Authority has set guidelines on encouraging banks to adopt a more modern approach to their technology stack, while the path has been paved for cloud technologies to form a core component of a bank’s infrastructure.
The deal has now been confirmed by IBM with Big Blue saying that it has signed a 10-year cloud services agreement worth £1.3bn including VAT.