Allied Irish Bank has awarded a €45 million contract to IBM, which will replace the bank's core financial systems and place it in the vanguard of technology adoption. IBM is providing new System z mainframe computers which will run a customised version of Indian firm i-Flex's banking platform.

Eddie Sweeney, general manager of enterprise systems and technology with the bank, likened the project to a "heart transplant".

I-Flex's Flexcube software, which is being ported to a mainframe platform for the first time, will replace systems that AIB developed in-house 30 years ago. Mr Sweeney said it was getting increasingly hard to find people with the skills to support these legacy systems. He said the older systems do not provide the necessary agility that a modern bank needs in order to be able to introduce new products quickly.

"Most banks don't want to run their core accounting systems on a non-mainframe platform but there are very few solutions on mainframe," said Mr Sweeney.

The project, which will be implemented over three years, is being watched by IBM globally because very few large banks have committed to replacing their core systems in this manner, explained Hubert Laird, client manager for financial services with IBM Ireland. "AIB is well ahead of the curve in what they are doing," said Mr Laird.