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Lloyds spends big on tech projects as profits slump 72% – FinTech Futures


Lloyds Banking Group has spent a total of £4 billion on technology investments under its three-year digital transformation programme, which was earmarked with a £3 billion budget – a significant increase on the bank’s prior plan.

Called “GSR3”, the project ended in December 2020 following a year which saw Lloyds’ profits dive from £4.39 billion to £1.2 billion, a 72% drop.

Lloyds sign

Lloyds’ fintech partners include Thought Machine and Form3

The bank has steadily increased its technology spend since 2018. In 2018, it represented 16% of operating costs, or £1.3 billion. In 2019, technology spend accounted for 19% of operating costs, or £1.5 billion.

Lloyds hasn’t explicitly stated the percentage of technology spend in its overall operating costs for 2020. From its results presentation it seems the bank spent around £1.2 billion.

This would be a reduction compared to the first two years of GSR3, but adds up exactly to the bank’s overall profit in 2020.


GSR3 was set up under Lloyds’ CEO António Horta-Osório, who is set to step down later this year.

A successor to the group’s prior transformation scheme GRS2, it included a 40% increased spend in digital technologies. GSR3 featured four key pillars, which Horta-Osório outlined at its launch in late 2017.

These were digitisation, driving greater customer relationships, boosting group-wide lending figures, and focusing on “skills for the future”.

Fintechs signed to Lloyds’ partner list since include London-based Thought Machine and Form3, as well as Sweden’s Minna Technologies.

Alongside investing in fintech, Lloyds also slashed its employee count last year. In November, the bank cut 1,040 back office support staff, bringing its total job cut count in 2020 to 1,900.

Lloyds’ digitally active customers increased by one million in 2020, or 6.1%, while mobile app users sat at a smaller 12.5 million. They racked up average customer logons of 26 per month, up 12% compared to 2019.

The bank says it has now digitised 78% of the group’s cost base. In 2021 it says it aims to double mobile app releases year-on-year.

Not as bad as feared

Analysts anticipated an even smaller profit. But the bank decided to put aside £4.2 billion – less than expected – to cover bad loans post-coronavirus.

This allowed the bank, which boasts 17.4 million digitally active customers, to pay a larger dividend of 0.57 pence a share.

Alongside Lloyds, its rival Metro Bank announced its financial results on Wednesday. Instead of making a decreased profit, Metro Bank saw losses widen considerably, from £11.7m in 2019 to £271.8 million in 2020 – partially due to more conservative loan provisions.

But despite a 72% dip in profits, Lloyds still stressed its status as “the UK’s largest digital bank”, having spent a cumulative £4 billion on technology since 2018.

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