The Bank of England plans to complete the replacement of the 23-year-old core system it uses to settle payments between banks, with a big bang migration before 2025.
The Real Time Gross Settlement (RTGS) system, as it is known, settles payments made on payment systems including the Clearing House Automated Payments System (CHAPS) and Bankers’ Automated Clearing Services (BACs). It has been in use since 1996 and is essential in ensuring money flows in the economy, and on an average day, it settles £600bn worth of transactions.
This month, the bank published a contract notice in the Official Journal of the European Union inviting potential providers to express their interest. A Technology Delivery Partner will be announced in May 2020, and the contract is currently for a maximum cost of £150m and includes technology and support.
Whichever supplier wins the contract is taking on a project of national importance and will support a carefully planned project over six years that will culminate in a massive migration between systems.
Victoria Cleland, executive director of banking, payments and innovation at the Bank of England, told Computer Weekly: “I expect a big bank cut-over because what you have with RTGS is the core ledger supporting payment transactions worth hundreds of billions of pounds a day, and we can’t have some member on it while others are not.”
She said, after talks with the Bank of England’s internal IT department, it looks likely it will keep the existing system up and running alongside the new one for a period as a fall back. “So if there was any problem, we know we could recover back to that.”
Part of the challenge is ensuring all organisations that link in to the RTGS are also prepared for the cut-over. “It is not just the Bank of England that needs to be ready – we also need to know the whole industry is ready,” said Cleland.
The Bank of England’s goals
The Bank of England’s goals include utilising modern IT, increasing the number of companies that connect directly to the system and making it available 24 hours a day.
While, like most major IT systems, there have constantly been small upgrades to the system over the years, the pace of change in the industry around it meant a major upgrade was required.
“I think it gets to the point where if you were to make fundamental changes, such as making it available 24/7 and increasing capacity, we think it is better to start from scratch,” said Cleland.
This has also meant timelines have changed. Back in 2016, the Bank of England set 2020 as the date to replace RTGS, but it is now expected to be finalised in 2025.
“When the programme started, it was looking at a timeline, but we have done a lot of work with the industry to establish what they want and how best to deliver that,” she said. “We are now looking at 2025 for completion with a number of transition states as we head to that.”
“It is fair to say what we want to achieve is a bit more ambitious now, and we are doing some exciting stuff around innovation and looking at ways of bringing in participants,” said Cleland.
The research part of the project established five broad goals set: higher resilience, broader access, wider interoperability, improved user functionality and strengthened end-to-end risk management.
Emea Content Editor, Computer Weekly