TSB customers are right to be aggrieved that almost a week after the transfer of their accounts to a new IT platform, millions of them are still getting unsatisfactory service.
The failure will almost certainly cost chief executive Paul Pester his job and the case for a clawback of hefty bonuses from the last two years is overwhelming. Bankers have escaped unscathed from catastrophic failures for too long.
Pester took too long to accept responsibility and to appease customers. It is amazing how many corporate leaders fail to heed the lessons of the past and recognise that when disaster arrives the only way to avoid reputational damage is to offer maximum compensation and care.
The failure at TSB will almost certainly cost chief executive Paul Pester his job and the case for a clawback of hefty bonuses from the last two years is overwhelming
What we still don’t know is why TSB’s culture of being better than the rest came so unstuck. What is evident is that its Catalonian owner Banco Sabadell believed it could deliver its own state-of-the-art digital banking to the British bank.
This begs several questions. What was the attitude of the TSB board to this gift from Barcelona?
Why did the Bank of England sign off on the £1.7billion sale of TSB to the Spanish bank? Isn’t TSB meant to be wholly ring-fenced from its Spanish owners?
And who are the IT contractors responsible for this fiasco? This is rich territory for treasury select committee chairman Nicky Morgan to explore.
Pester has called in a heavyweight team from IBM to sort out the systems mess.
But so far none of the original contractors on the TSB redesign and upgrade have acknowledged any culpability.
‘Accenture has worked with Banco Sabadell and other suppliers on its banking infrastructure system, but was not contracted to design, build or implement the TSB online and mobile banking system,’ says its head of media relations Alex Ross.
Computer Weekly reports that ‘Proteo 4 UK, as TSB’s new core banking system is known, is a UK-specific version of Sabadell’s existing core banking system, Proteo’.
The best that can be said about TSB’s future as a real challenger bank in the UK is that banking customers are incredibly conservative.
In much the same way as most Lloyds clients look to have accepted TSB as the new owners when 631 branches were moved, past experience of banking IT meltdowns suggest they will not be heading for the exit.
Many may, however, be hoping for an early ruling from the Financial Ombudsman service and handsome PPI-style compensation. Sabadell may have to dig deeply.
What customers shouldn’t forget is that if the systems are working – a big if in the TSB/Banco Sabadell case – switching to another bank should be easy.
But after the last week there may be some reluctance to trust TSB to do anything.
Maybe it is time to forgive Mark Carney, the sobriquet of ‘unreliable boyfriend’, after he signalled in Washington last week that a May bank rate increase was not a shoo-in and the markets were a little ahead of themselves.
The great deciding factor for the Bank of England governor was likely to be the latest purchasing managers index for the services sector, which constitutes some 70 per cent of British output.
But after a deeply disappointing 0.1 per cent rise in total output for the first quarter, a rate rise looks off the table.
Special factors may have played a role. The ‘Beast from the East’ played its part and may have contributed to a construction slump.
Through most of the first quarter inflation was still outstripping wage growth. But we cannot discount the fact that in spite of some healthy inward investment, uncertainty over Brexit afflicts business confidence.
The first quarter is often the weakest link. One would expect rising real incomes, near full employment and rising global output to help make up for lost ground.
Even monetary hawks will have to concede that normalisation of interest rates may have to wait.
Amazon has eyes for a bargain. It has just agreed to pay $65million per year to stream Thursday night National Football League games through its Prime Video platform, which now has 100m subscribers.
This is 30 per cent higher than it paid in the last auction but a fraction of the $3billion which Rupert Murdoch’s 21st Century Fox (soon to be Disney) paid for the next five seasons.
The popularity of streaming means that the economics of sports broadcasting is changing before our eyes.