Nationwide to invest £1.3bn in its digital transformation

NATIONWIDE Building Society will pump £1.3bn into new technology over the next five years in an attempt to transform the building society’s digital offering and compete with fintech start-ups.

The UK’S largest building society said the investment would lead to improved online services, increased use of artificial intelligence and the launch of a new technology hub that would create up to 1,000 jobs.

It comes at a time when traditional lenders are facing growing competition from increasingly popular onlineonly banks and financial apps, such as Funding Circle, Monzo and Revolut.

Joe Garner, Nationwide chief executive, said there would not be “a single big bang change or migration event”, seeking to ease concerns following TSB’S attempted IT launch that left thousands without access to their accounts.

The investment will hit Nationwide’s profits by around £250m in the current financial year. The cost will be repeated over the next five years.

It will create between 750 and 1,000 tech jobs, although Nationwide said it expected overall headcount to continue to fall year-on-year, as it has done since 2013, as it trims costs. It added that it was still deciding the final location of the technology hub.

Mr Garner said there were no plans for redundancies or branch closures as a result of the digital investments.

The group said it will help “simplify its technology estate and build new technology platforms to enable growth and diversification, and drive forward digital, data and analytic strategies”.

Nationwide’s mobile app now has two million active members, more than double the number two years ago, with 200 million mobile log-ins last year.

The building society has also launched a new £50m fintech investment fund to seek out start-ups that can take advantage of changes in rules around open banking.

Nationwide reported falling profits earlier this year, down 7pc to £977m after mortgage lending slipped and the housing market slowed.

Santander, meanwhile, also revealed plans yesterday to launch a new technology centre with a £150m investment in a new office in Milton Keynes. Santander said the building would ultimately be home to 5,000 staff.

Earlier this year TSB’S attempted shift to a new online banking service left thousands of customers without access to their accounts. Chief executive Paul Pester was forced to step down earlier this month following the IT disaster.