UBS's complex IT integration is costing more than expected

It's costly for banks to transform their tech infrastructure, even more so when they're integrating a recently acquired rival at the same time. UBS had already budgeted $13bn for its tech integration this time last year, but today it said it expects to spend even more. 

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Today's results presentation from the Swiss bank said its integration costs are expected to total $14bn by the end of 2026. Speaking on the Q4 investor call today, UBS CFO Todd Tuckner attributes the additional $1bn spend to "incremental costs" for "incremental opportunities to unlock shareholder value." The additional costs were already forecast last August.

UBS believes that the money saved will outweigh the extra expense. CEO Sergio Ermotti said on today's call that the decommissioning of cumbersome legacy applications is the current "most meaningful driver of cost reductions."  

Decommissioning is well ahead of schedule. UBS had aimed for 30% of non-core and legacy apps to be decommissioned in 2024; in reality, it expunged 42%. IT infrastructure costs are thought to make up around 20% of the bank's non-core spend.

Ermotti also said that "the massive migration of data [UBS is] going to go through in 2025 creates operational risk." Progress in that department has been slow. The bank has 114 petabytes of data to work through according to its presentation, more than the previously reported figure of 110, and has only sorted through 16PB thus far.

It's not just about integrating old tech, UBS is building new tech for its employees too. The bank said employees used its generative AI tools a collective 1.75m times during 2024.

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