TSB – lessons in readiness
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TSB – lessons in readiness

Challenger banks ready to make their move for the Capability and Innovation Fund

Figures released by payments company BACS, show the number of customers using the government’s Current Account Switching Service that TSB lost some 20,000 customer accounts between April and June this year as a result of its high profile failed IT migration from a legacy Lloyds platform to one run by its parent Banco de Sabadell. This of course has had a drastic impact on the business ; harder to quantify is the reputational damage suffered as angry clients took to social media to vent their frustrations.

 

TSB was not alone in angering customers this year with Natwest, RBS and Barclays also suffering systems failures. However, TSB´s situation is distinct as it had set out its stall as a challenger bank in the hope of luring swathes of SME accounts from RBS as part of the Alternative Remedies Package.

 

IBM, brought in to remedy the bank´s growing crisis, highlighted a failure to apply sufficiently robust testing ahead of TSB’s IT switch as lying at the heart of the bank’s woes. While some blame seems to lie with Sabis, Sabadell´s IT provider, this offers scant relief for those locked out of their accounts. It can however provide a valuable lesson for other companies hoping to benefit from the Alternative Remedies Package.

 

The Capability and Innovation Fund Alternative Remedies Package has the potential of being a once in a generation opportunity to reinvigorate the market for SME banking. The wide range of businesses which fit into this bracket share one characteristic: a desire to experience customer service superior to that which they have historically been offered. The Capability and Innovation Fund, as part of this package, seeks to encourage improved relationships between small businesses and the banking community, with an emphasis on customer-led design, innovative technologies and an ability to integrate and adapt solutions smoothly and with minimal delays. Fintechs are positioned to be prime beneficiaries of this as banks jostle to partner with those leading the field in delivering systems suited to future generations of banking.

 

The promise to deliver and the capacity to do so are however very distinct and, as witnessed by TSB, the results for any challenger that partners with a third-party that is not fully fit for purpose can have catastrophic results. Central to any decision-making surrounding procurement must be an in-depth assessment of a partner’s ability to provide true innovation and the structures to support it – a rigorous tyre-kicking exercise by those with the technological nous to ensure the appropriate checks are in place. After all, it will be the challenger bank, not those it appoints to facilitate new solutions, that will find itself in the crosshairs of public ire in the event of any future systems meltdown.

 

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