This week TSB banking customers have had a nightmare, unable to access accounts, check balances and pay staff, HMRC and suppliers. This is after a huge re-platforming exercise last weekend which went horribly wrong. CEO Paul Pester has been lambasted on social media for falsely claiming things were fixed on a number of occasions.
The bank`s spin doctors have rushed in to waive overdraft and interest fees for April and to raise the rate on the Classic Account from 3% to 5%. This will apparently cost them £20 million. But with maximum balances of £1,500 eligible for interest this could be a whopping £2.50 a month. Which will really placate people who can't pay their bills and have spent hours on hold, having IT rage.
High street banks' technology is wheezy, old and it needs upgrading across the board. But this is not a new story. We make radical changes to our banking system every 100 years and the consequences have always been painful.
In the 1830s we moved from tally sticks to paper ledgers. Tally sticks were made from willow. The debt was written on the stick which was then split in half. The debtor would keep half which was called the ‘foil’. The creditor would retain the other half called the ‘stock’. Willow has a very distinctive and specific grain and the two halves would only match each other. People soon realised that if you had a stick showing that the Earl of Crumpet owed you £5, then your half of the stick was worth £5 in its own right.
Clearly having mountains of willow sticks knocking about has its limitations and in the 1830s banking moved on to paper ledgers. The Exchequer had to get rid of excess of wooden tally sticks and some bright spark [geddit?] decided to burn them in the basement of the House of Lords. The blaze got out of control and destroyed both Houses of Parliament. Banking upgrades have never run smoothly.
Over a century later the paper-based ledgers were replaced by big old IBM mainframes in the 1960s. At that time the banks were the early adopters of technology. Innovators. Fast forward to the 80s and the investment banks snapped up the brightest engineers with hefty salaries and promises of gold.
Today it’s a different story – welcome to cost-cutting and the banks are outsourcing technology as talent is lured by the fresher fields of blockchain, fintech and challenger banks.
Our banks need to compete with the nimble, shinier challenger banks and global tech firms. But the tech which made them innovators in the 1960s makes them a wheezing tanker today. Modern businesses like Facebook can do a ‘rolling upgrade’. Move pockets of people over at a time. Control this. The irony is that it is precisely that lack of flexibility that is causing the banks to roll out these platform upgrades in the first place.
Banks have nothing without consumers’ trust. My word is my bond. Trouble is in a paper-free world where the only record we have of our money is some pixels on a screen, when this goes wrong the trust is broken. The problem with clicks replacing bricks is that when the clicks break, the bricks aren't there.
Customer outrage from TBS users is reminiscent of RBS’s 2012 nightmare when millions were unable to access accounts. I don’t think this will be an isolated incident and we will hear many similar stories as the IBM-powered beasts of the 60s try and lumber into the new world, with outsourced technologists struggling to control this after a prolonged internal brain drain.
Maybe it’s time to go retro and bring back the tally stick? Or is blockchain just the digital version of two willow halves?
If you’ve been affected by the TSB fallout, you are able to claim for any financial loss, fines or penalties incurred as a result. Any impact on credit ratings should also be reversed. Complain to the bank first and follow up with the Ombudsman as a last resort.
Have a great weekend all
P.S. Are you into gardening? If so we hope you like this new podcast which takes us on the road to Chelsea, exploring the build-up and show week itself. Sponsored by M&G, the podcast takes me to Crocus Nurseries, I meet M&G Chelsea garden designer the lovely Sarah Price, talk to expert botanist James Wong and hang out on an allotment with the M&G boss Anne Richards who actually knows a thing or two about raspberries and mulching, even if she admits to being stumped by carrots! Listen to the Let’s Grow podcast here.