TSB, Banco Sabadell’s British bank, has been plagued by failures since it moved about 5 million customers to its new platform on 20–22 April 2018. What is known as of 26 April, and what it teaches businesses.
Between Friday 20 and Sunday 22 April 2018, TSB, the British bank that Banco Sabadell acquired in 2015, moved the data of about 5 million customers and 1,300 million records from the systems of Lloyds Banking Group, its former parent, to a new platform, Proteo4UK, belonging to the Sabadell group.
What has happened
The problems began on Sunday night and became visible on Monday 23rd: customers unable to log in to internet banking or the mobile app, with zero balances or wrong data and, according to some testimonies, with access to other people’s accounts. TSB acknowledged intermittent problems, put them down to high user volumes and on Tuesday 24th took online banking and the app out of service to fix them. Its chief executive, Paul Pester, apologised and promised that no customer would be left out of pocket. On Wednesday 25th he declared the access problems fixed, but complaints from customers kept coming.
Banco Sabadell had announced on 23 April that the migration had been completed successfully, before the problems were resolved. In its first-quarter results presentation on 26 April, the group notes that the weekend before TSB migrated 5 million customers and 1,300 million data records, that the non-recurring costs of the migration have already been booked in the quarter and that the technology synergies will start to show from the second quarter. The project cost €546 million: Lloyds contributes 450, under the initial purchase agreement, and Sabadell absorbs 96, recognised between 2016 and the first quarter of 2018.
The reaction of Parliament and the regulators
Nicky Morgan, chair of the House of Commons Treasury Committee, wrote to Pester to ask what went wrong, how far the problem extends and how customers will be compensated, and said the situation has all the hallmarks of an IT meltdown. The committee announced that it will also write to the Financial Conduct Authority (FCA), the conduct regulator for financial firms, for its assessment. The Information Commissioner’s Office (ICO), the UK data protection authority, said it was aware of a potential data breach involving TSB and was making enquiries.
What it teaches a business
A technology migration concentrates risk into a few days: data, processes and access are all moved at once, and a failure reaches customers, staff and regulators at the same time. Before a change to a critical system it is worth checking whether it has been tested with real user volumes, whether there is a rollback plan (going back to the previous system if something fails), whether the migration can be done in phases rather than over a single weekend and who decides at each point that it is safe to go ahead.
Communication matters as much as the technology. Here the message that the change had gone well collided with the experience of customers who could not get into their accounts. Any company changing a system that affects its customers, however small, would do well to give notice, provide a phone line or an alternative channel and explain candidly what is happening.
If your business or your family deals with an institution that announces a change of systems, it is worth asking for the dates, avoiding concentrating critical payments such as payroll, taxes or due dates on those days, and keeping an alternative means of payment.
Migrating a system is a technical decision, but its failures are suffered by the customer: that is why it is tested beforehand and communicated clearly.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
