Soon after Catalonian bankers Sabadell spent £1.7billion on buying TSB, two executives came a-calling and gave a demonstration of the brilliance of the bank’s online service.
Out came the smartphones and on a single screen we were shown how customers could access all financial needs, from mortgages to current accounts and deposits.
Funds could be moved between accounts and savings products or to pay bills at a touch of the screen. Even to a technophobe this looked like the kind of banking that British consumers deserved.
If TSB could replicate what Sabadell claimed they were doing, it could jump ahead of other banks offering online services.
TSB’s online banking plan turned into a nightmare after the system it got from new owners Banco Sabadell failed leaving customers frozen out of their accounts
One cannot blame TSB chief executive Paul Pester for chasing this goal. He had real incentive to do so in that TSB remained a prisoner of Lloyds Bank, paying its previous owner £200million a year to run IT.
TSB has wooed customers with promises of transparency and consumer friendly offerings and had been preparing to replicate Sabadell’s digital model in the UK.
What persuaded Pester and his colleagues to cancel the Lloyds contract and press ahead with the Sabadell model before it was fully confident that it would work is a mystery.
Large scale tech migrations have a habit of going wrong and that is why responsible managements go slowly and keep back-up systems running.
TSB is not the first enterprise to get its IT wrong. In recent times Barclays had trouble when it moved equity customers onto its Smart Investor system.
Royal Bank of Scotland had serious problems with its legacy IT systems and confessed to failure when it couldn’t migrate RBS customers in England onto a new Williams & Glyn platform.
TSB thought it was smarter than anyone else and the result has been catastrophic. Customer privacy has been trashed, bills have remained unpaid, debit and credit cards have been rendered worthless, mortgage deals have unravelled.
It is not the first time that Accenture, a contractor on the IT contract, has been caught out. Some years ago the London Stock Exchange used the firm’s predecessor Andersen Consulting to design a dealing system.
It was hopeless. LSE chief executive Peter Rawlins fell on his sword and the exchange bought an off-the-shelf system from Sri Lanka.
Triathlete Pester urgently must restore order and stop customers from fleeing elsewhere. The bank cannot escape offering compensation to all those out of pocket and may have suffered trauma. He should then consider his own position.
The authorities bear responsibility for a starry-eyed welcome of Sabadell to the UK when directors were looking to escape from a messy Catalonia divorce from Spain. And TSB needs to show it has a robust UK board willing to stand up to Spanish masters.
Chief executive Greg Mesch of Cityfibre cannot be blamed for enthusiastically accepting a bid from infrastructure funds Anton and Goldman Sachs’ West Street.
The premium to Tuesday’s opening share price is 87 per cent and shows again that many London stocks are undervalued.
The real worth to Cityfibre and its broadband partner Vodafone is the access to capital, which will allow the group to pursue its ambition of controlling up to 20 per cent of the UK’s superfast broadband, throwing down the gauntlet to BT.
Cityfibre is less regulated than BT and is able to take advantage of existing ducts in cities and towns, ranging from Edinburgh to Milton Keynes, to lay its fibre.
BT reckons it would take £30billion of investment to cover the country with fibre and that would be impossible given current pricing constraints imposed by Ofcom.
Chairman Jan du Plessis is on a mission to win government support for a great push forward.
Much of what has gone on at Melrose in the past has been under the public radar.
Not any longer. Added to the commitments the company has already made about not selling aerospace for five years, it has now had to sign up to national security stipulations.
The company may seek to throw up flak by accusing the previous GKN management of wasting shareholder funds on bid defences.
But if the super-rich Melrose bosses hadn’t gone hostile in the first place such costs would not have arisen.
Perhaps Chris Miller and friends should subtract the ‘surprise’ extra costs from their future bonus pot. No chance.