How are personal and business banking customers affected by TSB downtime?

Following TSB’s recent migration to a new online banking platform, nearly two million accountholders were locked out of personal and business bank accounts online for around a week in one of the financial services industry’s worst ever IT failures.

In total, 1.3 billion records representing five million customers were due to migrate from IT systems operated by the bank’s former parent group, Lloyds Banking Group, over to a platform created by its new Spanish owners Sabadell – a process that was due to be completed by Sunday April 22nd.

But glitches meant that millions of customers were unable to access banking services online, while over 400 were at times shown information from other people’s accounts, all of which has left TSB facing compensation payouts and a pledge to refund charges incurred by accountholders during that time.

In a statement, TSB CEO Paul Pester said: “As we moved over to our new banking platform last weekend, the landing was an incredibly bumpy one for our customers.”

The incident highlights how disruptive a lack of online banking services can be for customers who have come to depend on accessing their account via a website or mobile app – so is there a better way to manage money online?

High street banks with legacy online banking platforms

This incident was a long time in the making. Lloyds Banking Group was formed when Lloyds merged with TSB in 1995, and was then known as Lloyds TSB.

In 2009, during the recession and banking crisis, the UK government took a 43.4% stake in Lloyds TSB, and European Commission competition laws meant some of the business must be sold off.

The Co-operative Bank initially expressed an interest in acquiring the 632 branches that would ultimately become TSB Bank; however, when this deal collapsed, TSB was divested in 2013 and floated on the stock market as a bank in its own right.

In July 2015 the bank was finally acquired by Sabadell, and in order to sever its remaining links with Lloyds, it became necessary for accounts to move over to a new online banking platform.

This recent issue shows how, more than a decade after the credit crunch, sub-prime lending crisis and global recession, customers of the high street banks continue to be affected by the fallout, turbulence in the traditional financial services sector, and a failure to get online services right in time for launch.

Arro Money co-founder and director Mahmood Kamran said: “Internet banking gives users the opportunity to access financial information at all times, quickly and easily, but security must not be compromised. The popularity of this convenience has led a lot of the bigger banks to update legacy systems that are no longer fit for purpose, and with these migrations comes the risk of problems, sometimes on a large scale.

“When situations such as this arise, people lose faith in managing their money online, and banking technology in general. We’d like to think lessons will be learned from this incident, but it does vindicate our decision to develop our own proprietary platform which is already operating at a future-proofed level of compliance and security.”

A purpose-built future-proofed online money management dashboard

Arro Money’s online money management dashboard powers both the Arro Personal Account and the Arro Business Account, giving you a reliable, intuitive platform to set up payments, view deposits into your account, and filter transactions according to online purchases, card payments, ATM withdrawals and so on.

Unlike some online account providers, Arro Money developed our platform in-house using seasoned IT programming professionals, and with security in mind.

It is compliant with OWASP security protocols and verifies customer data down to street level, helping us to comply with our Know Your Customer commitments.

We ask customers to use two-factor authentication, and we even have built-in support for facial recognition if and when PSD3 standards are adopted by the financial services industry – meaning we can seamlessly switch on this option for login authentication when the time comes.

As new standards are developed, we can continue to incorporate them into the Arro Money dashboard with minimal disruption for accountholders, while other online account providers may be forced to completely change their design, layout and functionality as their third-party software licences expire.

We have worked hard to ensure that whether you are an Arro Personal Account or an Arro Business Account customer, your account is always accessible when you need it, and will continue to offer you the essential functionality you need to manage your money effectively in the years to come.