The Lasting Legacy IT Disruption Can Have In Consumer Banking

Last year, TSB lost thousands of customers when its IT systems switchover caused widespread outages and led to consumers and businesses being unable to access their accounts.

At the time, Paul Pester, TSB Chief Executive Officer, commented on the issues by saying:

“We’re making progress in resolving the service problems customers experienced following our IT migration, and we will continue to work tirelessly until we have put things right.  I know how frustrated many customers have been by what’s happened.  It was not acceptable, and was not the level of service that we pride ourselves on – nor was it what our customers have come to expect from TSB.

“It has been a difficult time for customers and I am grateful to them for their patience. I would also like to say thank you to our Partners for their enormous efforts.  They have done everything in their power to continue serving our customers, and I am proud to see that the values on which the Bank has been built have shone through during this time.

“Our priority in the second half of the year continues to be putting things right for our customers.  Looking further ahead we are determined to get back to bringing more competition to UK banking and ultimately making banking better for consumers and small businesses.”

Shortly afterwards, Paul stepped down from his position, showing how detrimental the issues had been to his career. Commenting on the changes, Richard Meddings made it clear that the IT problems were a key driving force in this decision.

“Paul has made an enormous contribution to TSB. Thanks to his passion and commitment, TSB is today one of the UK’s strongest challenger banks, serving over 5 million customers across the UK. On behalf of the TSB Board, I want to thank Paul for everything he has achieved as CEO and pay tribute to the contribution he has made in bringing greater competition to the UK retail banking market.

“Although there is more to do to achieve full stability for customers, the bank’s IT systems and services are much improved since the IT migration. Paul and the Board have therefore agreed that this is the right time to appoint a new CEO for TSB. Our goal is therefore to allow a full search to commence, without any distractions, enabling TSB to build for the future.

“Meanwhile I have been asked by the Board to take on the role of Executive Chairman on an interim basis. Together with the Executive Committee, we have three immediate priorities: to complete the work of putting things right for customers; to enable the bank to achieve full functionality – including the availability of all product services and launch of a leading Business Banking offer; and appointing a CEO for the next chapter of TSB.”

Later, TSB had a further issue, with smaller problems causing the bank further problems throughout 2018.

Andy Cory, identity management services lead at KCOM commented shortly after TSB’s second issue with authentication, which saw clients locked out of their accounts.

“A broken authentication system has an instant impact on customer loyalty. If a business cannot provide easy access to its services without sacrificing security, it only has itself to blame when its users desert.

“The problem is balancing access with security. Too easy to get in and you risk leaving customers unguarded; too many security measures and it becomes offputting for users.

“Fortunately, there is a way to achieve the best of both worlds. Frictionless customer authentication – where users can access online services with zero input into the identification process – is becoming a reality.

“For example, geo-location and geo-velocity checking allow companies to trace a user’s physical location and how far they have travelled since their last login. Taken together, they verify if the user is who they claim to be and make any manual input from the customer unnecessary.”

The latest results from the Competition and Markets Authority (CMA) showcase the long-term detrimental effect that the IT issues have caused. In the personal banking space the firm was last for its online services, but within the business banking space TSB was last in almost every category including online banking services, highlighting how much more important IT stability is for businesses. 

There may also be other factors at play, including poor interest rates, lack of availability for certain financial products and poor customer service as a whole, but there is clearly a link between the lack of faith consumers and businesses now have in TSB’s IT infrastructure and its poor ratings in this latest poll.

Looking ahead, TSB needs to restore faith through new initiatives and by showing its clients that it has truly put its IT failings behind it. For more of the latest news, insight and banking knowledge, subscribe to Wealth & Finance International Magazine HERE.