TSB-Bank-branchTSB’s head honcho Paul Pester is set to step down, as the bank continues to struggle with mammoth IT troubles left over from a botched core banking switch.

TSB chairman Richard Meddings will take on the role of executive chairman until a new chief executive is appointed.

The bank was running on core banking software provided by its sister bank, Lloyds Banking Group. Maintenance for the systems was costing TSB between £100-£200 million ($136-$272 million) per year. Sabadell immediately set to replacing the software with a bespoke version of its own technology.

The incoming system, Proteo4UK, was a modified version of Sabadell’s Proteo core banking software, itself an offshoot of Accenture’s Alnova retail system. The Spanish company allocated three years and a reported £450 million to the project, with its own internal teams set to spearhead the switchover.

The TSB Meltdown

TSB released its first product on the Proteo – a mobile app – in early 2017. The bank’s CEO, Paul Pester, said at the time that more than 2,500 hours had gone into the core banking project. Originally planned for a late 2017 big bang launch, the bank decided to postpone to go-live to avoid the expected interest rate increase in November of that year.

Finally, on 21 April 2018, the bank was prepared to make the final switchover. It shut down a portion of its online banking services in preparation for the final few systems to come online. A series of LinkedIn posts, discovered by the Guardian and then surreptitiously deleted, showed Sabadell employees celebrating the switchover with sparkling wine for a “job well done”.

It didn’t take long for the first cracks to show. Users began to question why they were still unable to access their accounts the following day, and why the bank’s website had slowed to a crawl. Irregularities began to appear for anyone who did manage to get into their accounts. One customer told the BBC that he had been given access to someone else’s £35,000 ($48,870) savings account and £11,000 ($15,360) ISA. Another took to Twitter to ask the bank why they suddenly were in arrears to the tune of £1,128,443 ($1,535,296). Others reported being able to see multiple accounts, including sort code and account number information.

By 25 April, TSB admits that as many as half of its 5 million customers cannot bank online due to capacity problems. It adds that Its internet bank is operating at only 50% capacity, although its mobile app is at 90% capacity. National news media began to jump onto the dogpile. The Daily Mail ran with a headline declaring that TSB’s name must stand for “Totally Shambolic Bank”.

As the issues ran into a second week, TSB called in specialist help from IBM engineers, given a deadline of 28 April to fix the problems. Reports on social media following the date revealed that customers were still having issues, and that Java error appearing on the bank’s error messages were revealing damaging information about the state of the bank’s innermost code.

Pester was summoned to face a committee of MPs on 2 May and explain the problems ongoing at the bank. He told the Treasury Committee 40,000 complaints had been received after unacceptable customer experiences, yet argued that the migration had still be successful. TSB bosses stressed that the work had not been rushed through to get certain financial incentives. At the heart of the problem was the inability of testing environments to properly predict the capacity of the system upon go-live.

 

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by Alex Hamilton
Alex is Senior Reporter at IBS Intelligence, follow him on Twitter or contact him at: alexanderh@ibsintelligence.com
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