TSB brought to its knees by IT meltdown

By Dan, Eastpoint Software on 27 March 2018

The crisis began after a planned IT upgrade to a "state-of-the-art" platform caused chaos for millions of TSB's mobile and online banking customers with many unable to access their accounts. Some customers were even able to see others peoples' accounts. 

TSB CEO Paul Pester, was forced to issue an apology to many of the banks 5 million customers after a planned IT upgrade caused chaos for its mobile and online banking customers. Numerous customers reported issues within hours of the new platform going live after being locked out of their accounts. Mr Pester assuered customers that "To begin to put things right we’ll be waiving all overdraft fees and interest charges for our customers for April" after facing heavy critiscm for earlier tweeting that "Our mobile banking app and online banking are now up and running". 

TSB had warned customers in advance that online and mobile banking would be unavailable for a short time while the records of 5 million customers were migrated from a banking platform run by it's previous owner Lloyds to a new "state-of-the-art" system called Proteo4UK designed by parent company Banco Sabadell, Spains fifth-largest banking group, who purchased TSB in 2015.

What went wrong?

IT infastructure upgrades on this scale rarely run smoothly and TSB isn't the first enterprise to misjudge the complexity and disruption a migration of this size can cause. Its only a few years since Barclays had trouble when it moved equity customers onto its Smart Investor system. In 2003, Royal Bank of Scotland experienced serious issues with its legacy IT systems and was forced to admit failure when it couldn't migrate RBS customers in England onto a new Williams & Glyn platform.

How many customers were affected?

Despite warning their 1.9 million active mobile and internet banking customers in advance it wasn't long before users took to social media to express just how bungled the migration of 1.3 billion banking records had been. Many users tweeted that they were unable to access their accounts while some customers were seeing other peoples accounts.

The TSB Boss has been heavily criticised for misleading customers after tweeting on Wednesday morning "our mobile banking app and online banking are now up and running" when many users were still locked out of their accounts. TSB later said on their official Twitter account that its service still had "intermittent problems". However, the under fire Mr Pester reassured customers in an interview with BBC 5 Live on Thursday morning that customers would still be able to make payments with their debit card and withdraw cash from ATM's as usual.

How much is this going to cost TSB?

In an attempt to salvage some customer trust, TSB said that it will be waiving all overdraft fees and interest charges for all retail and small business customers for April. In a move likely to cost the bank millions it will also be increasing the interest rate on its Classic Plus account from 3% AER to 5% AER from 2nd May. TSB has estimated that waiving overdraft fees and increasing interest rates on its most popular account could cost £20m.

CEO Mr Pester promised "We are making sure no customer is left out of pocket – this is the least we can do...I’ve agreed with the Sabadell Chair that I will take responsibility for our IT platform. I’ve drafted in experts from IBM to get to the bottom of the issues and fix them."