TSB Computer Meltdown – Problems Nearly 2 Weeks On

Customers of TSB are reportedly still experiencing difficulties with internet and mobile banking services nearly 2 weeks after problems first began.

What Happened?

TSB, which was acquired by Spanish bank Sabadell in 2015, tried to fully migrate its computer systems from its old Lloyds Bank systems to its new core banking system, known as Proteo4UK. Proteo4UK is basically a version of Sabadell’s in-house core banking platform Proteo which has been designed for TSB.

The system had already been rolled out to staff in November 2017, and the full rollout to customers was also supposed to have happened in November but was put back until April to avoid potential confusion of the expected interest rate rise.

Why Migrate?

The expected benefits behind TSB’s decision to migrate were cost savings through not having to pay £160 million per year to Lloyds Bank for hosting, and the opportunity to be able to implement its own customer-facing systems offering digital banking services.

TSB had already launched a mobile app for Android and iOS devices to enable customers to use banking services via the new system in a convenient way, and was in the process of offering iPhone X users the opportunity to use their faces as identification.

Meltdown

Unfortunately for 1.9 million TSB customers, the bank staff, and TSB’s reputation, the migration did not go to plan and resulted in what some commentators have described as a ‘meltdown’ of its banking systems.

Some of the problems experienced by customers have included not being able to access their own money, no access to any mobile and online services, problems with direct debits, and amounts of money appearing and disappearing. It was even reported that one customer was mistakenly credited with £13,000. TSB has also been deluged, understandably, with complaints, with TSB staff facing hostility, and the reputation of the bank taking a battering in the media.

Response

Several apologies later, and even though TSB’s CEO Paul Pester announced in BBC Radio 4 interview that he would take direct control from the banks’ platform, and that he’d drafted in a team of global experts from IBM, and although the mobile app is now reportedly fixed, some customers are still reported to be experiencing problems. Some have appeared in tv news reports telling of their experiences and of their fears that important bills may not have been paid as a result of the system’s problems.

Treasury Committee Wants Answers

Executives from TSB and parent company Sabadell have been asked to appear before MPs to respond to questions and give evidence to the Treasury Select Committee on Wednesday 2nd May over the ongoing IT system outage.

What Does This Mean For Your Business?

It is well known that many banks run on old systems which have led to glitches in the past i.e. customers not being able to access their money, and have been the cause of worries about security. The case of TSB illustrates how the company had good commercial intentions as a challenger bank in migrating its systems to reduce costs and meet the modern customer’s digital expectations, but ended up creating a PR disaster for itself. It is thought that the problems could cost the bank millions in lost customers, compensation, and damage to the brand.

Some commentators have criticised the bank for mismanaging the migration and for focusing too much on creating fancy apps rather than focusing on just getting the migration to happen as smoothly as possible.

It has also been suggested that, if joining or switching to a new bank, customers could do worse than to ask their proposed new bank what their plans are in terms of core banking platforms, whether they have any major IT projects planned, and how up to date is the core banking system is.

The problems with TSB’s banking systems will undoubtedly have impacted many businesses as customers were unable to access funds or to spend as they normally would, or to pay existing agreements, and this all adds up to extra costs, reduced profits, and stress for business owners.

This story is also a reminder to businesses that unforeseen and potentially costly IT problems can happen, particularly with cyber-crime activity, and that having a good Business Continuity Plan and Disaster Recovery Plan is important.