Nationwide Building Society is to maintain its branch network after unveiling plans to pump an additional £1.3 billion into new technology in a move than, over time, should create hundreds of jobs.
The extra cash will bring the group’s total tech investment plans to £4.1bn over the next five years, during which it expects to create between 750 and 1,000 jobs in a new “technology hub”.
In a document entitled “Redefining Service for a Digital World”, the Nationwide 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”.
However, it insisted that there were no plans for redundancies in other parts of the business and provided assurances that its branch network will be maintained.
The fresh investment will still come at a cost, with the group now expecting to take a £200 million to £250m hit in the current financial year, around half of which will be recognised in the first half. That annual cost will be repeated over the next five years.
Joe Garner, chief executive of the Nationwide, which took over the profitable core of the Dunfermline Building Society in 2009 when the latter was laid low by risky property deals, said: “Nationwide is in a position of financial strength with capital levels at an all-time high.
“At a time when customer expectations of service are rapidly changing in a digital world, we are investing to ensure that we continue to provide leading service.
“We believe that our members want a combination of human service on the high street, as well as digital convenience. As a building society, we are able to deliver both – continuing to invest in our branches alongside this significant investment in our technology and operational capabilities.
“As part of this overall investment, we anticipate creating an additional technology hub in the UK and employing between 750 and 1,000 people over time.”
The five-year investment plan is aiming for “sustainable” cost savings of £500m by 2023, which extends its previous target by a further £200m.
Last month, Britain’s biggest building society warned of a “subdued” UK housing market in the months ahead with little growth in prices after posting a fall in profits. It said people were “adapting their behaviours” in response to a squeeze on disposable incomes.
The lender said statutory pre-tax profits fell to £281m in the three months to 30 June, from £322m over the same period last year. However, it noted that it was up against tough comparative figures, with last year’s numbers boosted by its £26m VocaLink disposal.