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Report For Submission To The
Monopolies Commission re The Automation Activities Of Barclays Bank Limited
And The Savings Which Will Result From The Merger Of Barclays, Lloyds And
Martins Banks This report is intended to present a factual survey
of the Automation activities upon which Barclays Bank Limited are engaged.
The second part of the paper seeks to give an indication of the gains which
will follow the proposed merger. Equipment The
Bank's total complement of computers, installed or on order, is as follows:- IBM 1 x
360/65 (purchased) 4
x 360/50 (3 purchased, 1 temporarily rented) 10 x 360/30 (all purchased) 3
x 1401 (2 purchased, 1 rented) Burroughs 1
x B8500 (purchased) ICT 2 x
Emidec 1100 (purchased) Punched
Card equipment is being built up; so, too, are the number of Branch
Terminals, Input Machines and Amount
Encoding Machines. In all fields the
objective has been to order sufficient hardware to permit completion of the
Bank's current plans Computer
Centres There are seven of these either in being or in
course of preparation as follows: - |
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No.
1 Computer Centre |
154
Drummond Street, London, N. W. 1. |
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Lombard
Street Computer Centre |
(In
our Head Office building) 54
Lombard Street, London, E. C. 3 |
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Greater
London Computer Centre |
179a,
Tottenham Court Road, London, W. 1 |
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Clearing
Department |
St.
Swithin's House, E. C. 4. |
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Barclaycard
Centre |
St. Giles Terrace, Northampton. |
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Northampton
Computer Centre |
Gladstone
Road, Northampton. |
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Burroughs
Computer Centre |
Harrow
Road, Willesden, London, N. W. 10. |
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Staff
Projects in hand or already completed Barclays Bank Limited first became interested in
the possibilities of automating certain of its activities as long as 10 years
ago and opened its first branch book-keeping Computer Centre in 1961. The Bank decided, as a matter of
policy, not to commit itself to a
large scale programme of automation until suitable third generation equipment
became available. It was only approximately three years ago that the decision
was taken to move into automation across a very broad front. Some of the
projects referred to in this report are already completed and the remainder
will be completed by early 1971. The equipment which is shown has been bought
or ordered with a view to enabling this to be done and where the choice has
been between additional equipment and a manual process (e. g. teleprocessing
as opposed to Van Collection of Input) the decision has invariably been to go
for the additional equipment and thereby avoid increasing our manpower
requirements. The projects to which we have referred above are
as follows: - §
Branch Book-keeping §
Standing Orders and Direct Debiting §
Clearing Operations §
Registrar's Department §
Chief Foreign Branch §
Executor and Trustee Business §
Staff Salaries and Statistics §
Barclaycard §
Customer Services,
e. g Payroll, Stock Analysis, etc. §
Magnetic Tape Exchange between Banks and their
Customers. §
Branch Securities §
Management Information §
Management Science Techniques. It will be appreciated that many of these projects
are of immense magnitude and have involved extensive preparatory work and
planning. |
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Distribution
of Activities and Computers Inevitably there are from time to time transfers
of work and/or machines between Centres, but the following describes the
present position adjusted to incorporate changes now imminent:-
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The Willesden Centre, which is to receive the Burroughs
computer, should be commissioned later this year. Initially it will undertake only branch
book-keeping, retaining spare capacity
for later developments. Current plans are to move the book-keeping now
performed at the No.1 and Lombard Street Centres and concentrate this at
Tottenham Court Road and Willesden by 1971. Lombard Street Centre will be
closed. No. 1 Centre will be used for computer processing of the Foreign work
for the three banks. Constraints In its planning the Bank has had to act within two
main constraints, namely: -
Because of these the Bank has had to continue with
its plans and the execution thereof during the period since its proposal for
a merger with Lloyds Bank Limited and Martins Bank Limited was referred to
the Monopolies Commission. Expected Gains from the Proposed
Merger between Barclays, Lloyds and Martins Banks This part of the paper gives an indication of the
total gains, both short-term and long-term, which may be expected in: -
Both Barclays and Lloyds have particularly heavy commitments
in respect of branch automation programmes,
which they need to meet in full before decimalisation. This date,
February 1971, therefore becomes a convenient demarcation line between
"short-term" and "long-term". The short-term gains can be
more readily assessed than the long-term ones, though there is no doubt that
both will be considerable. SHORT-TERM SAVINGS Systems and Development Staff Barclays and Lloyds each have a
Systems/Programming strength of 150 skilled staff, whilst Martins have 34.
These numbers are growing and, of
necessity, there must be some duplication of effort, so that a saving of 125
in the short-term maybe regarded as a conservative estimate. It is emphasised
that these are highly qualified people whose skills are becoming yet more
pronounced as computer development progresses Their short supply is a
national problem which is likely to grow rather than lessen in the years
ahead. Management Science Management Science in banking is an exciting new
prospect to which Barclays are increasingly devoting resources. Their team will grow to some 30 highly
skilled analysts, comparable in strength to that of Bankers Trust Company of
New York who are leaders in this field. The Barclays' team will handle the
work for the three banks following the merger and there will be no need for
their duties to be duplicated by Lloyds and Martins. A team of at least
equivalent numbers to that of Barclays can thus be saved in entirety. These are
the elite of the operational research area; M.Sc's and B.Sc's of high calibre
who are nationally in great demand. Organisation and Methods Barclays, Lloyds and Martins all have resources
allocated to this field of operations and Barclays, in particular, are in the
process of building up their O. & M. section from 50 to some 120 staff so
that a clerical work improvement programme (Work Study) may be introduced
throughout the entire bank. Lloyds and Martins will benefit from the manual
of predetermined time data which is being established, and in addition it is considered that one
O. & M. team instead of three will
produce short-term savings of at least 25 staff. Martins Branch Automation Martins are about to plan the automation of their
branch network, which would involve them in central computer equipment
costing £1,500,000.
Their 1 million accounts can be accommodated either on Barclays' Burroughs
computer, or on Lloyds Birmingham
Computer Centre, at an estimated cost
of not more than £500,000, principally for disk storage. There would be
related savings of space and of some 60 skilled operating staff. Clearing Departments The total staffs of the three banks' Clearing
Departments number more than 2,000. The major savings will follow the
long-term amalgamation, but short-term it is considered that at least 50
staff, principally concerned with distribution tasks in the City of London,
can be saved. Share Registration. Lloyds' Registrar's Department is already fully
automated, using an IBM 360/40 at Worthing.
Barclays' Registrar's work is in the process of being automated and
could be comfortably accommodated on the Lloyds' computer. Apart from
releasing the Barclays' computer for other tasks, it is estimated that some
100 Barclays' staff would be saved,
over and above those that would have been surplus following their own
automation programme. Credit Cards Lloyds intention to enter the credit card field
would entail the employment of a minimum staff of 385. Barclaycard have now developed an extremely
able staff and have, too, acquired considerable expertise. Their Management
consider that the Lloyds work could be absorbed into their existing
organisation at the cost of 100 staff,
thus saving 285 people. Computer and ancillary equipment savings can
be conservatively assessed at £200,
000, whilst Lloyds would also benefit from not having to undertake the
considerable development work inherent in such an operation. Foreign Work Barclays are well advanced with the automation of their
Chief Foreign Branch. This is an involved and complex task, and Lloyds and Martins can take advantage
of all the preparatory work which has been completed. In addition, by
re-arranging their computers Barclays will undertake the whole of the Foreign
automation work for the three banks, thus freeing Lloyds' and Martins'
computers of an equivalent task. The No. 1 Computer Centre (Drummond Street) will
be vacated pre-decimalisation and into there will go the IBM 360/50 earmarked
for Barclays' Chief Foreign work, together with the "Barclaycard"
360/50 from Northampton.
Back-to-back these two computers will handle the total foreign work
and provide stand-by. Into Northampton for the Barclays branch clearing will
go the IBM 360/30 which is at present spare in the Greater London Centre and
to this will be linked the duplex 1419's. The Barclaycard updating run, at
present processed on the Northampton 360/50, will be run overnight on one of
the "Foreign" 360/50's. Trustee Work Lloyds Bank have already made much progress in the
systems/programming studies which precede the automation of their Trustee
Department. Barclays can benefit from the acquisition of this work. Customer Services This is an area into which all the banks will
increasingly make inroads, undertaking a wide variety of services such as
payroll, stock control, discounted cash flow and cheque reconciliation.
Barclays have already developed computer programs and can make these
available to Lloyds and Martins. Branch Terminals The intention of the three banks is to link all
their branches to main computer centres by means of terminal equipment and G.
P. O. telephone lines. The terminal equipment costs from £3, 000 to £4, 000, depending on type, whilst the running
expenses vary inversely to the capital expended. For every branch closed, or not
opened, following the merger, there
would therefore be an immediate capital saving of up to £4, 000, together
with lower running costs, whilst the demand for Post Office telephone lines would
be reduced at a time when the G. P. O.
is faced with a major programme of line networks for the banks, to be
completed by decimalisation. The short-term savings may be
summarised in the following chart:
Annual
Savings
Capital
Savings
Long-Term Savings Capital savings on branch terminal equipment, with
the corresponding lessening of demand on the G. P. O. for telephone lines, will continue for as
long as does the branch rationalisation programme. Every branch closed, or not opened, in the future will mean a reduction of up
to £4, 000 on capital outgoings, plus
related savings in running expenses. There will,
too, be continued saving of Specialist staff and in the long-term it
is considered that another 50 systems/programmers will be spared as a result
of combining the research and development work. At that stage, therefore,
the requirements for highly qualified data processing staff will have
been reduced by some 290, quite apart
from the savings to be achieved in the short-term from Registrar's Department,
Credit Cards or Clearing Department,
and quite separate from any long-term savings which will follow the
amalgamation of the Clearing department or the Computer Centres. An amalgamation of the Clearing Departments of the
respective banks can profitably be undertaken. Two courses will be open; to
merge the entire clearing operations into one London Centre (as against the
present arrangement of three centres in London and one in Northampton), or to
process the total branch clearing in Barclays' branch clearing centre in
Northampton and amalgamate the general clearing into one London centre. At
the worst, this will mean two clearing
centres instead of four and will produce capital equipment savings in the region
of £1 million, since an amalgamation
would require 4 fewer reader/sorter systems. Not only will this in itself
lead to fewer skilled operating staff, but further substantial staff savings
will follow the removal of the need for inter-bank settlement in respect of
the considerable quantity of items which will automatically change from the
category of general clearing to branch clearing To quantify more exactly the
total benefits which will accrue in this area will call for a detailed study
by a combined inter-bank team. Further principal gains from the merger will be
realised when the various branch systems have been rationalised and are fully
compatible. A joint study team can commence immediately to plan this
work, but completion of the task is
unlikely to be effected before decimalisation. Subsequently, however, with
full compatibility of branch systems,
it will be possible to merge the computer centres of the three banks
and to complete such an undertaking by about 1974. The merit in having purpose-built centres is
becoming clear, for in themselves they bring economy of operation. Barclays
and Lloyds, individually, would certainly have to face this in the seventies.
Together, and with Martins, they could
reap the advantages of a combined operation. Whether the three banks, when
merged, will wish to go for just two super-centres, one near London and one
in the North, or for three or four centres sited at various strategic
geographical points, has yet to be decided. There is something to be said for
each course. Either way, to a greater or lesser degree, there will stem from
such an amalgamation the following benefits:-
At present it is not possible to quantify these long-term
savings This will require a detailed investigation of some magnitude What is very evident is that if we job-back to a
point in time five, or seven years
ago, we can visualise the time, effort
and capital which could have been saved in the field of automation had we
acted in unison as one bank rather than as three separate entities. There is
every reason to believe now that comparable gains will be achieved in the
future as the result of concerted policy and action. Management
Services Department, 16th
April, 1968 |
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Special
Thanks to Barclays Group Archive |
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Text © Barclays 1968, Design © gut informiert
2007 to date |
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