Netherlands’ Rabobank draws on outsourced IT “knowledge”
Dutch cooperative Rabobank has increased its outsourcing of banking software development and testing, via a five-year deal with technology specialist Cognizant that the cooperative hopes will provide it with the benefits of stronger technology.
Representing some 500 local Dutch and international banks, Rabobank has its origin as a federation of local credit unions, focused mainly on food and agribusiness. The company is a cooperative, so it is owned by the local branches, rather than the other way round.
Originally, Rabobank began outsourcing the testing of its corporate banking software to Cognizant, in around 2006/7. Now, according Robert Niesert, executive vice president GICT at Rabobank, the outsourcing agreement has been broadened enormously to include the software behind finance control, procurement, payment and pensions.
“The main reason for outsourcing in this area is knowledge,” Niesert told Banking Technology. “Cost is not the main factor – we are focused on the quality of service,” he said. “If it saves us 10% doing this, that’s an advantage, but the real benefit is better applications. The IT market in the Netherlands is declining – the number of qualified students who graduate in this area is poor. That is important for us, because IT is essential to what we do.”
Outsourcing solutions have become hugely popular among many businesses for their cost saving potential in recent years. In November, Norwegian broker Christiania outsourced its execution to specialist company Neonet, in a move aimed at freeing up resources to concentrate on the broker’s core business in research. However, outsourcing occasionally draws criticism from some market participants, especially where there is a lack of local support on the ground for products that may have been developed in another market such as the US or Asia.
Under the deal with Cognizant, the maintenance of applications takes place offshore, but development of new systems takes place on-site in the Netherlands. Niesert is based at Rabobank’s offices in Utrecht, an inland city that was one of the country’s most important in the Middle Ages. Today, he says that he has high hopes that the deal with an outsource specialist can help drive innovation, especially in network technology.
“Cognizant has people on the ground in the Netherlands,” he said. “We are developing new technology for banking software, and we view this as a long-term partnership that will provide long-term benefits for us and for our customers.”
In the Netherlands, the Dutch central bank De Nederlandsche Bank itself allows Rabobank Group to supervise the solvency, liquidity and administrative organisation of the 500 local banks that are part of the group. The other two major Dutch banks are ING Group and ABN Amro, which are managed separately.