Lloyds Banking Group plans to cut hundreds of millions of pounds in annual technology costs by switching its computer systems to a new platform developed by a start-up, triggering fears among unions about large-scale job losses.The British high-street lender has started discussions with regulators about transferring data on about 500,000 customers of its old Intelligent Finance brand to test a new core banking system built by Thought Machine, according to an internal company presentation seen by the Financial Times.

If the move is successful, Lloyds could carry out a similar transfer across all of its businesses over the next few years.Lloyds, which has shed more than 30,000 jobs and closed almost a quarter of its branches in the past eight years, hopes the shift will stave off the threat of digital upstarts by further cutting its costs and allowing it to offer new, more personalised products.Many established banks are burdened with complex and inefficient IT systems developed through decades of mergers and incremental upgrades.

The bank knows when and where jobs will be lost as a result of the implementation of Thought Machine’s core banking platform and it should publish that information immediately

Mark Brown, general secretary of BTU unionThe rise of digitally focused start-ups with more modern platforms has increased pressure on incumbents to improve their old systems or transfer them to potentially expensive and risky new systems. Lloyds’ presentation said “incremental improvements” to existing IT infrastructure “can only go so far”.

The bank invested £11m in November for a 10 per cent stake in Thought Machine, which was founded by a team of former Google engineers.The fintech’s “Vault” core banking platform is cloud based, making it cheaper to run and scale up than older systems built on mainframe computers. It also promises to give better insight on customer data and make it easier to test and roll out new products quickly.

Lloyds spends about £2.2bn a year on IT running and improvement, meaning the estimated 35 to 40 per cent reduction in costs from using Vault would save it more than £750m annually.

Lloyds already has one of the lowest ratios of costs to revenues among Britain’s high-street banks. It is aiming to go from spending close to £47 of every £100 in revenue it earns on day-to-day operations to the “low 40s” by the end of 2020.

However, the Thought Machine project — dubbed its “architecture hedge” — indicated that a “step change” in technology could go further and let it match digital banks such as N26 and OakNorth, which can operate at cost-income ratios of less than 30 per cent.

The presentation noted that “rationalisation” of its existing systems would affect employee numbers, triggering alarm among trade unions.Mark Brown, general secretary of the independent BTU union, which represents about 20,000 Lloyds staff, said: “The bank knows when and where jobs will be lost as a result of the implementation of Thought Machine’s core banking platform and it should publish that information immediately. Hiding that information from staff is unacceptable.

”Lloyds has previously pledged to retrain as many staff as possible to avoid compulsory redundancies as part of its investments in new technology.Changing customer habits have raised the prospect of significant changes in the number and type of roles across the banking sector. Barclays on Tuesday said it would cut 165 customer relations and technology change roles at its Leeds office, with a further 115 jobs to be relocated to other centres specialising in digital processes.

The potential transfer of large volumes of customer data is likely to face intense scrutiny from regulators and politicians following a number of high-profile technology failures over the past 12 months.Most notably, TSB’s attempt to move its customers from an old system at its former parent Lloyds to a fresh platform built by its new owners Spain’s Banco Sabadell ended in a disaster that led to the departure of TSB chief executive and has so far cost it more than £200m.

A person close to Lloyds stressed that any moves to a new platform would go ahead at a “cautious” pace.