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Technology / Cybersecurity

TSB CEO Falls on Sword Amid IT Migration Mess

TSB CEO Paul Pester has stepped down from the helm of the High Street bank after seven years in charge, the day after the bank was once again forced to apologise after customers were unable to access their online and mobile banking.

Pester, who has a doctorate in theoretical physics, led TSB’s initial public offering on the London Stock Exchange in 2014. The bank was acquired by Spanish bank Sabadell the following year and has been migrating from Lloyds’ core banking systems to the “Proteo” systems of Sabadell in a bid to save on a £160 million annual hosting fee.

TSB CEO Exit Follows Executive Exodus

The move continues a TSB executive exodus, after Chief Marketing Officer Nigel Gilbert, Treasurer Ian Firth and HR Director Rachel Lock all handed in their notice last month.

TSB CEORichard Meddings, current Non Executive Chairman of TSB, will take on the role of Executive Chairman “with immediate effect” in order to enable a full public search to commence for a new CEO, the Spanish-owned bank said

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A deeply troubled core banking system migration has left customers regularly locked out of accounts and caused a surge in fraud that has cost the bank £115.8 million in the first half, it revealed in its first half results.

Migration from Lloyds to “Proteo4UK” Systems

TSB is migrating millions of customer accounts from Lloyds Bank systems, which have hosted them since TSB was separated from Lloyds, to a UK version of Sabadell’s existing core banking system, Proteo, dubbed “Proteo4UK”.

The migration has been significantly error-prone.

IBM has been brought in to support the migration and earlier this year suggested in a devastating presentation to TSB executives that preparation for the move had been inadequate, saying “Performance testing did not provide the required evidence of capacity and the lack of active-active test environments have materialised risk due to issues with global load balancing (GLB) across data centres.”

“A combination of new applications, advanced use of microservices, combined with use of active-active data centres, have resulted in compounded risk in production: This demands extensive engineering, testing and proving, as well as significant mitigation strategies, including roll-back,” IBM added in a presentation shared with Parliament.

“This scale and complexity require longer than normal to prove the platform through incremental customer take-on to observe and mitigate any operational risks. The complexity results in a broad range of technical and functional problems that are hard to diagnose.”

Errors Causing Surge in Fraud

In H1 results TSB announced costs of £318 million for migration related work, along with “post-migration” costs and foregone income of £176.4 million.

This comprised provision for customer redress, associated remediation resource costs and fraud costs of £115.8 million; “additional resource and advisory costs to support the remediation of systems and operating defects” of £30.7 million and “foregone income of £29.9 million related to waived fees and charges as a result of service disruption.”

The High Street bank increased the interest rate on its Classic Plus account from 3% to 5% and is waived overdraft fees and interest charges, as well as any returned item fees incurred during customers’ March and April billing periods in a bid to keep customers on board, as Computer Business Review reported earlier this year.

Proteo is based on the Alnova retail core banking system supplied by Accenture, but Sabadell has reworked the system and owns the IP.

 
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CBR Staff Writer

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