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TSB's middleware nightmare: Execs grilled on Total Sh*tshow at Bank

MPs slam bosses for failure to grasp reputational damage to UK online banking

The boss of British bank TSB has insisted it carried out rigorous testing ahead of a systems migration that saw thousands without access to their accounts for over a week – but revealed he won't be getting a chunk of his bonus.

In a heated evidence session in front of Parliament's influential Treasury Committee, representatives from the bank were accused of failing to grasp the full scale and implications of the failure, and slammed for their tone-deaf approach in handling the outage and the hearing.

The bank’s online, app, telephone and branch services have been wobbly at best - and completely inaccessible at worst - since Friday 20 April, when TSB took its systems down for a planned migration off its former parent Lloyds Banking Group’s infrastructure.

However, when TSB went to make the systems live on 22 April, it realised there was a major problem, as some 402 people were able to see other customers’ account information for about 20 minutes - before everything was whipped back offline. The resulting chaos continued for the best part of the following week, with customers locked out of their accounts for days. Some continue to report intermittent issues today.

The bank has been slammed for the way it handled the outage, with CEO (Comedy Executive Officer) Paul Pester being slow to make a public statement – and then irritating users by insisting that everything was working, but they just couldn’t tell because the systems customers need to use to see that everything was working weren’t, er, working.

It’s an unacceptable situation to have in banking in the 21st century...

Pester seemingly failed to learn from this, and in his appearance today struck a rather tone-deaf note, even at one point touting TSB as the main "challenger" to the leading UK banks.

"Without TSB there is no one holding the big five to account," he said. (We’re sure they’re quaking in their boots after this.)

Although he offered his apologies to customers - who have made some 44,000 complaints in just 10 days (a normal period would see about 3,000), of which the bank has only managed to acknowledge half - Pester’s inability to grasp just how big the problem he and his bank faced infuriated the committee.

“Do you realise the reputational damage this has done, not just to TSB, but to online banking in this country?” asked chair Nicky Morgan.

"Please don’t underestimate the scale and the concern with which bank customers generally are watching this, and are now worrying that it could happen to them. It’s an unacceptable situation to have in banking in the 21st Century."

Underlying the frustrations was Pester's insistence that the migration of the 5 million-plus customers and 1.3 billion records - which TSB has claimed is the biggest undertaken in Europe - had worked well.

“Though I am certainly not downplaying anything about the issues that our customers have faced… it’s important to understand that that migration of data [from Lloyds Banking Group to TSB’s new system], which is often very challenging, went smoothly and the bank balanced to the penny,” he told the committee.

“The underlying engine of the bank, the processing of transactions, is running relatively smoothly.”

The problem, Pester said, is that the middleware systems were unable to deal with the number of customers that wanted to access the banks systems - which the committee seemed to view as something of a technicality, given that's a fundamental part of banking.

Undeterred by the obvious tension in the room, Pester explained:

We believe the issues we’re seeing in the system are in the middleware… As I understand our system, we have underlying physical infrastructure - data centres here in the UK, hosted for us by IBM - then a communications layer, then a middleware layer and on top of that sits the branch, telephony, internet and app, which is accessing, through the middleware, the underlying data.

It’s the middleware causing issues with the throughput of data… The underlying engine of the bank is working very well.

When asked about the decision to bring in a separate – and no doubt costly – team from IBM, which was appointed just last Wednesday (PDF) and whose members are unlikely to have been involved in the design, coding or initial testing of the system, Pester said it was so TSB could "benefit from their global expertise" in middleware.

The plan to move off the IT systems of Lloyds Banking Group - which it split from in 2013 - came in 2015, when TSB was bought by Sabadell for a sum of £1.7bn. At the time, Sabadell estimated the system switch would save the bank some £160m a year, and the committee pressed the witnesses on whether they were under pressure to migrate more quickly than they planned.

Both Pester and TSB chairman Richard Meddings said no, with Pester saying that, "honestly I don't believe" that it was rolled out too quickly. (He did later say, though, that if he could turn back time, he wouldn't have gone live after the migration.)

When quizzed about what testing had been carried out in advance, Meddings said that there had been an "extensive process" to design the new platform - known as Proteo4UK - which began about two years and nine months ago.

Pester expanded on the testing, saying that the bank had carried out individual testing of units of software, testing with those units put together, had flushed data through them, and then run non-functional testing and volume testing.

They had carried out nine migration acceptance cycles where the biz extracted data rom the Lloyds system and put it into the new one, he said, and had five dress rehearsals for the weekend.

"What happened after the migration… clearly showed those tests were misleading," Pester said. "We have to get to the bottom of that."

The bank has commissioned an independent review into what went wrong, along with bringing in solicitors Slaughter and May and asking Deloitte to assess how to best to reimburse customers for both money lost and any distress the lack of banking access might have caused.

Meanwhile, it was revealed that Pester will not be taking the bonus he was offered for a successful migration - but his overall bonus, along with those of other execs, will be decided at the end of the year as usual. ®

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