KBC And Rabobank Abandon Idea Of Joint Back Office

Since mid 2004, KBC and Rabobank Nederland have been working on developing a common cross border platform for the settlement of securities transactions for both retail and professional customers. This joint venture was launched under the name, Orbay. The aim

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Since mid-2004, KBC and Rabobank Nederland have been working on developing a common cross-border platform for the settlement of securities transactions for both retail and professional customers. This joint venture was launched under the name, Orbay. The aim was to allow KBC Bank and Rabobank to be more flexible in their response to market developments, to improve the quality of their customer service and to cut costs significantly. It was also intended to enable them to share substantial IT investments and take advantage of the opportunities afforded by new technologies.

When the project got under way in mid-2004, the plan was for the Rabo side to be fully operational in 2005 and for KBC to subsequently connect up its Belgian activities in 2006.

Setting up such a complex cross-border project meant taking a good many technical and practical hurdles. An outside ICT partner was called in to help develop new, specialised software for the processing platform. However, the project has encountered delays, and the original schedule may not be met. Further delays would mean that connecting up KBC’s Central European subsidiary banks would also have to be put off and that further cost-savings might not be realised.

To date, the financial consequences of the delays have been limited where KBC is concerned, partly because most of the envisaged savings had already been achieved in-house over the past few years through the processing of bigger volumes and efficiency and process improvements, among other things.

Because of the delay in schedule, KBC has decided to withdraw temporarily from the joint venture. Orbay’s supervisory board was apprised of this yesterday evening. The firm Orbay will continue to exist to ensure the continuity of the processing of Rabo’s securities transactions.

In the months ahead, KBC will examine how to develop the software application it is currently using into an open architecture application, so that other group companies (e.g. the Central European subsidiary banks) can be connected to it within a reasonable period of time and hence create further synergies. At the same time, KBC will continue to follow developments at Orbay with interest.

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