Client name: A high street bank

The Financial Services Authority (FSA) took over regulation of the UK mortgage industry on 31st October 2004. With this came new, compulsory requirements for mortgage providers to offer higher quality and better documented advice to consumers. In addition, they were being asked to record mortgage procedures in standardised formats and demonstrate tighter management of exposure to risks including fraud and defaulting. The penalty for non-compliance was severe: banks would be unable to trade in mortgages.

The legislation necessitated major changes to IT systems. For our client, it meant an upgrade of three core mortgage systems handling approvals, servicing and arrears. It also had to considerably enhance its data warehouse so it could supply more detailed customer information to internal credit systems.

Such large changes to IT systems can sometimes bring instability to the overall technology infrastructure. Our client recognised it needed to minimise disruption to everyday processes and maintain 'business as usual' whilst the upgrades took place. This would ensure the continuity of its credit risk operation and that customers would be unaffected by the modifications taking place.

Detica was responsible for redesigning and redeveloping a series of data marts in the client's SAS data warehouse. This involved restructuring data so it could feed seamlessly into the revamped mortgage systems. In doing this, Detica helped to ensure the bank's credit risk systems - needed to manage and maintain mortgage balances worth over £50 billion - were continuously available whilst the work was carried out.

At each phase, Detica had to complete its reprogramming work before the bank could move forward with the next part of the upgrade. As such, Detica had to work quickly and liaise very closely with the bank's internal team.

Detica's involvement enabled the bank to comfortably meet the end of October deadline. The client's in-house IT team were able to proceed, confident that data feeds would be uninterrupted and their credit risk modelling capability would be enhanced.

Since business continuity was maintained, our client's customers were unaware of the upgrade and continued to receive high quality customer service. The bank was able to continue to assess the risk of new applicants and carry out day-to-day administration on its existing customer base. Since the upgrade, the bank is now better placed to assess lending risk and its procedures are more standardised. In common with other financial institutions which can demonstrate significantly improved credit risk procedures, it may also be permitted by the FSA to lend a greater proportion of its capital as mortgage balances to customers, hence improving profitability.