Halifax leads the way in outsourcing card processing

Halifax, has broken with the traditional reticence of financial services to outsource operations. The UK's largest mortgage lender has signed a contract with EDS, the global IT services provider, to do exactly that in a contract which industry experts estimate to be worth around £100 million.

Reluctance in the financial sector to outsource and processing stems partly from problems with value-added tax and the perceptions of non-core and core activities. EDS services to Halifax deal with non-core activities and include provision of credit card processing services and systems which use behavioural analysis techniques, enabling Halifax to launch promotions tailored to specific customers within 24 hours.

Kevin Flanagan, head of card services at the Halifax said: "This approach opens up the possibility of the kind of sophisticated marketing programmes which we have been unable to offer before".

David Courtley, UK managing director of EDS, said : "Other banks, I'm sure will be matching this move... they have been more cautious in their thinking about core and non-core activities, and here is some evidence of that changing".

EDS already provides card services to Girobank and HFC (Goldfish), Royal Bank of Scotland, Credit Suisse and Alliance and Leicester and handles about 2.6 billion cardholder transactions, but a spokesperson for EDS told I-FM, "There are many more services banks could outsource, but they don't".

Julie Crisp