Allied Irish Banks to modernise payments software with Dovetail

Allied Irish Banks in payments software modernisation with Dovetail

Allied Irish Banks (AIB) is set to modernise its payments platform. The bank has recently concluded a system selection to that effect. The new supplier is Dovetail, Banking Technology understands.

The new payments hub will support high-value, low-volume payments as well as high-volume, low-value ones.

Dovetail’s solution will replace the Global PayPlus (GPP) legacy platform that has been in place at AIB for many years. GPP is supplied by D+H Corporation’s payments unit, Global Transaction Banking Solution (GTBS, formerly Fundtech).

The contract has just been signed.

Order in court!

In the fintech world, AIB is known for its high-profile court case against Oracle FSS (unrelated to the payments initiative above).

In 2011, AIB took Oracle FSS (the bank’s major software supplier at the time) to court claiming €84 million in damages for the failed implementation of the Flexcube core banking system.

This figure represented nearly 70% of the net profit made by Oracle FSS in the previous financial year. (As for AIB, just in the first half of 2010, the group made a loss of €1.7 billion.)

The bank claimed €84 million were the costs and expenditure it “wasted” on trying to implement Flexcube for retail banking operations.

AIB was seeking damages for misrepresentation, breach of contract and negligence. It was also claiming further compensation for loss of profits and damage to goodwill.

The vendor was originally contracted in 2005 to provide the software for AIB’s wholesale banking activity (to replace Misys’ Bankmaster). Accenture was the integration partner.

The bank also evaluated Misys and Temenos before settling for Oracle FSS. At the time, the AIB team felt that Oracle FSS’s product had better functionality and that the vendor’s promise of implementation assistance was a better one than that of its rivals.

The 2005 Flexcube deal, known as Project Pentagon, was not part of the bank’s action. It was the subsequent extension to cover the retail banking activities of AIB – dubbed Project Acorn – that caused trouble.

Project Acorn was given the green light in 2007. Prior to signing for Flexcube, the bank also evaluated its other existing providers, such as Temenos, Misys and SAP.

According to the bank, the 2007 agreement applied the terms of the 2005 one. Oracle FSS was to replace AIB’s 20-year old retail banking software with Flexcube. The system was to be deployed on IBM System z with DB2 database, which the bank considered to be an achievable task (thus making AIB the first to adopt such a platform for Flexcube).

The vendor was informed of this key requirement, claimed AIB, and accepted it.

However, Project Acorn was plagued by technical problems and project management failings. The bank claimed it has tried time after time to have Oracle FSS respond and was given assurances by the vendor that the problems would be resolved.

The intention (and agreement) was to move around five million AIB customers to the new system in the course of three years, but in reality this was applied to merely 3,000 customers.

In March 2010, the Flexcube implementation work was halted and the 3,000 clients were reverted to the previous system.

Around the same time, the supplier informed that although it would continue to work with AIB on the development of Flexcube on z/DB2, the overall development of the system for western banks on this platform from IBM was being terminated.

This, AIB claimed, contradicted what Oracle FSS had conveyed prior to the 2007 agreement: that AIB would be among a number of top-tier banks in Europe and the US using z/DB2-based Flexcube. The bank anticipated to benefit from the resulting efficiencies, such as shared upgrade costs.

But Oracle FSS’s announcement meant that AIB would be the only bank among its peers using this version of the system, thus negating the awaited benefits. It was induced into the 2007 agreement by misrepresentations made by people working for the supplier, AIB claimed.

As an alternative, the bank was offered the Oracle-based version of Flexcube, but AIB’s evaluation of the proposed system showed that it was “wholly unsuitable” for the bank’s retail business requirements.

As no satisfactory resolution was found, the matter was taken to court. Oracle FSS intended to counter-claim against AIB for breach of contract and outstanding fees.

In late 2011, a settlement was reached between the two parties.