Intesa targets new digital-only clients after antitrust blow

By Valentina Za

MILAN (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, 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 or Apple, 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.

(This story has been refiled to change the dateline to May 3 and to fix a typo in the headline)

(Reporting by Valentina Za; Editing by Sharon Singleton)