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TSB To Bring IT In-House After Tech Disaster

Brian Baglow

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bank it failures

Technically troubled TSB is to bring its IT systems in-house in the wake of the systems failure which left millions of customers locked out of their accounts.

The Times reports that TSB is holding discussions with parent company Sabadell regarding how much it should pay for the new IT system, or whether it should pay anything at all.

The original agreement with Sabadell was that TSB would pay an undisclosed sum for the delivery of the Sabis platform, and then an annual service charge of £110m once the system was up-and-running. However, the platform lacked the necessary capacity, meaning that many TSB customers were shut out of internet banking and unable to access their own cash.

The details of the agreement may come to light when Sabadell reports its half-yearly results on July 27.

In-House Management

If TSB brought IT management in-house, then the bank would either have to recruit a new IT team, or work with a technology provider, such as IBM, to provide it with the necessary resource.

In a letter earlier this month, Paul Pester, TSB’s ‘troubled’ chief executive told the Commons Select Committee: “TSB is now discussing with the group how TSB might ‘in source’ its IT infrastructure and manage it directly,”

“Our current view is that this could provide a more reliable service to TSB customers.”

Meanwhile, the European Banking Authority has proposed stricter rules for banks that want to outsource operations such as IT. The watchdog has claimed Brexit could spark a significant rise in such agreements, as financial institutions set up subsidiaries in the EU.

Migration Mismanaged

The discussions follow reports from IBM that the bank did not carry out sufficiently rigorous testing as it migrated from the Lloyds Banking Group systems to the new system Sabis platform. As the technical meltdown unfolded, TSB brought the technology giant in as a troubleshooter to help mitigate and resolve the problems.

IBM produced a slide deck four days into the disaster, which has since been released by the Commons Treasury Committee. In it, the tech giant questions the bank’s testing process, saying it “has not seen evidence of the application of a rigorous set of go-live criteria to prove production readiness.”

IBM also stated that such a large and complex project would require: “longer than normal to prove the platform through incremental customer take-on to observe and mitigate any operational risks” It also warned that such complex projects bring a broad range of hard-to-diagnose technical and functional problems.

“To address this risk profile, IBM would expect world class design rigour, test discipline, comprehensive operational proving, cut-over trial runs and operational support set-up,”

The Register reports, IBM “has not seen evidence of technical information available to TSB”, such as architectures, configuration and design documents, test outcomes or monitoring information.

The release of the slide deck by the Treasury Committee adds more pressure to CEO Pester, who’s already faced calls to resign, from the chair of the committee itself, after customers faced high levels of fraud and claims he misled MPs when giving evidence about the bank’s IT problems.

The Financial Conduct Authority is now investigating the issue.

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Brian Baglow

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