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Antitrust ruling derailed client migration timetable

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Technology side of project progressing well - CTO

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To migrate full group IT infrastructure by end-2026 - CTO

By Valentina Za

MILAN, May 2 (Reuters) - Italy's biggest bank Intesa

Sanpaolo on Friday said it had acquired some 90,000 new

customers through its digital-only arm Isybank, after an

antitrust decision effectively halted the migration of existing

clients.

Italy's competition authority dealt a blow to Intesa's

fintech ambitions in November when it ruled the bank had to

obtain explicit consent from the around 4 million clients it

planned to move to Isybank based on their digital habits.

Intesa had informed customers digitally of an opt-out

deadline.

Intesa has moved more than 350,000 existing customers, it

said, against an original March target of 2.3 million.

With its client migration timetable in tatters, Intesa is

sticking to a goal of adding one million new clients through

Isybank by the end of next year.

Chief Technology Officer Massimo Proverbio said the delays

had only affected the commercial strategy related to existing

customers, while the digital transition to a cloud-based IT

infrastructure progressed.

"Things have gone very well: the infrastructure has proven

reliable, we've successfully tested it with as many as 20

million accounts," he told Reuters.

London-based Thought Machine, which also partners with

Lloyds and Standard Chartered ( SCBFF ), supplied the

core banking technology Intesa used for Isybank, which runs on

cloud services provided by Alphabet and Telecom Italia

following a 2020 accord with Intesa.

European banking supervisors have urged banks to make

technology a priority to keep their business model profitable as

consumers increasingly turn to digital services and digital

champions, including non-bank ones such as Amazon ( AMZN ) or

Apple ( AAPL ), emerge.

Europe's biggest bank BNP Paribas aims to have

more than 40% of its IT system running on cloud services by

2025.

"Between end-2025 and early-2026, we plan to migrate the

main bank onto the platform that currently supports Isybank.

We'll migrate the private banking and wealth management

businesses in the course of 2026," Proverbio said.

Goldman Sachs estimated that cost savings from Intesa's

fintech strategy could help to boost the return on tangible

equity at its commercial banking operations by 3.3 percentage

points by 2026.

Intesa's IT investments topped 3 billion euros in the first

quarter, against a 5 billion euro goal for 2022-2025. They

should boost gross income by 150 million euros next year, Intesa

said.

As a comparison, rival UniCredit, which a decade

ago outsourced its IT infrastructure, targets 2.8 billion euros

in IT investments in 2022-2024.

Proverbio said Intesa was relying less on external IT

providers after bringing in house some 1,800 IT specialists,

despite the scarcity of tech graduates in Italy.