TSB meltdown caused by inadequate upgrade of IT system
The meltdown locked out thousands of customers (pic: Terry Murden)
TSB’s meltdown last year, which locked two million customers out of their accounts, was caused by a new IT system not being ready to migrate data from Lloyds Banking Group to its new Spanish owner Sabadell, according to a report.
Lawyers at Slaughter and May, who carried out an inquiry into what went wrong, were critical of the system built by Sabadell’s in-house IT team Sabis – and of management’s failure to ask questions.
In their report the lawyers said: “We have concluded that the new platform was not ready to support TSB’s full customer base and Sabis was not ready to operate the new platform.”
The TSB board should have “done more to assess, and should have provided a stronger challenge to the executive’s explanation of the adequacy of testing,” said the report.
The chaos which began in April 2018 sparked one of the UK’s biggest-ever banking systems crises and led to chief executive Paul Pester stepping down. Fraud attempts were 70 times higher than normal levels at one point during the crash, according to the report.
The bank said Slaughter and May’s report is one of a number of reviews which have been carried out by external parties and by teams within TSB over the last eighteen months.
“These reports have highlighted other aspects which are not fully reflected in Slaughter and May’s report and, as a result, there are aspects of Slaughter and May’s report with which the board does not agree,” it said.
The bank insisted a key cause of the extent of disruption was that the two data centres, built to support the new platform were, in certain areas, configured inconsistently despite having been specified to be identical.
“Additional issues around coding and capacity also arose. These technical issues were then compounded by the high volume of customer enquiries as public concern increased – enquiries which exceeded the contingency resources already in place.”
The 2018 migration was a highly complex project, involving over four years of detailed planning and testing.
The TSB board recognised that moving the whole bank from multiple, third-party legacy systems to a single new platform was a huge but necessary undertaking. The migration was therefore carried out in stages, initially moving systems including ATMs, debit and credit card payments, mortgages and the digital mobile app, followed by key internal systems, and ultimately the main migration event, including the migration of customer data.
Despite migrating the core banking data and payment records for all five million customers, there were significant levels of disruption and inconvenience in the aftermath of the main migration event in April 2018.
The bank made important changes to enable the bank to rebuild – including to leadership and management structures, as well as the decision to take direct control of its IT operations.
The bank compensated every eligible customer who was impacted by the disruption.
The board says there is a faster mortgage applications process, the introduction of new digital capabilities such as identity verification on TSB’s mobile app, opening times for current accounts and business accounts less than half of what they were before the migration, and the introduction of an industry-leading Fraud Refund Guarantee to protect innocent victims of fraud.
As the most recent data from the FCA shows, IT incidents at TSB are now in line with, or below, the levels of others in the industry.
Richard Meddings, chairman of the TSB board, said:“On behalf of everyone at TSB, I want personally to apologise again for the service disruption which customers experienced during the spring and summer of 2018. I would also like to thank everyone at TSB for their significant efforts and commitment to putting things right for our customers and for getting the bank into the position it is in today.
“When we commissioned Slaughter and May to carry out this review, we specifically asked for a fully independent and thorough inquiry. Although the report doesn’t paint the full picture of migration, the Board were absolutely clear that we wanted to be transparent and learn fully from those aspects which went wrong. That is why we have taken the decision to publish this report in full.
“Importantly, TSB has evolved to be a better business than the newly created bank which began the migration project. We have already made major changes as a result of what we have learned, including moving to take direct control of our IT operations. With the leadership of Debbie Crosbie as our CEO, we are now well on track to get TSB back to what it does best: serving customers and bringing better choices to UK banking.”