Antonio - stock.adobe.com
It wasn’t hard to decide which story to top the list this year. If TSB’s IT migration had been trouble-free, it would still have featured on the list, such was the scale of the challenge. But the problems experienced by customers immediately after the migration make this a must-read story for IT professionals.
There have been IT disasters at UK banks before – RBS’s 2012 CA-7 batch process scheduler problems spring to mind – but the TSB problems stand out. In the lead-up to the migration, TSB had been boasting about its IT and how the migration would put it ahead of its traditional rivals, so people were watching closely.
Time will tell whether the migration will benefit TSB, but there has been a lot of pain – and there could be more.
For comparison, read about the relatively smooth IT migration experience at Clydesdale and Yorkshire Bank, in our interview with its CIO, Fraser Ingram.
Of course, TSB wasn’t the only IT meltdown to hit the headlines in 2018. Millions of people and businesses could not use their Visa cards when a hardware failure caused systems to crash at the beginning of June.
And it is not only IT blunders that are threatening the traditional financial services companies. There has been further acceleration of the fintech (financial technology) sector over the past year, and the top 10 list reflects that. Fintechs are challenging the traditional players with their funky and user-friendly technology and creative business models.
Another jump into the future and we might start to see how blockchain is more widely used, as well as the cryptocurrenies associated with distributed ledger technologies. For that reason, this list needed to feature them.
TSB has experienced the difficulties of moving from age-old trusted legacy core banking systems to a brand new platform designed for the digital banking that today’s customers want – and all this in public.
TSB moved millions of customer accounts from the systems of Lloyds Bank, which has hosted them since TSB was separated from Lloyds, to a new core banking platform from its current owner, Spanish bank Sabadell.
As a result, customers were locked out of their accounts and experienced money disappearing from accounts. Some were even able to see other customers’ accounts.
TSB customers were angry, regulators and government are now involved, and banks that are yet to migrate from legacy systems are probably very worried.
Visa claimed a “hardware failure” was to blame for the service disruption that left millions of businesses across the UK and Ireland unable to accept credit card payments on Friday 1 June. In a series of statements published by the credit card payments firm in the wake of the outage, it moved to reassure customers that hackers had had no hand in the incident.
“The issue was the result of a hardware failure within one of our European systems, and is not associated with any unauthorised access or cyber attack,” the company said.
The disruption is thought to have started around 2.30pm on 1 June, and was fully resolved several hours later.
IT failures at UK financial services firms increased by 138% in a year, with failed IT changes being the main cause, according to research from the Financial Conduct Authority (FCA).
A report from the regulator revealed that about 600 technology outages were reported to the FCA between October 2017 and September 2018.
Megan Butler, executive director of supervision – investment, wholesale and specialists at the FCA, said: “On the basis of the data that the FCA is currently collecting, we see no immediate end in sight to the escalation in tech and cyber incidents that are affecting UK financial services.”
The most common root cause of these incidents was IT change, with 20% reporting this to be the case.
Fraser Ingram and his team have been transforming the Clydesdale and Yorkshire banks through digital technology.
The banks, as well as app-based bank B, are part of the CYBG holding company. It is the latter, and the platform it sits on, known as iB, which has been driving change at the bank and for its customers.
As fintech shakes up the banking sector with consumer-friendly banking apps, the traditional players have been investing in their own offerings – and CYBG is no exception.
B was built on CYBG’s iB digital platform through a £350m investment. It now has 190,000 customers and £1.8bn in deposits.
The app-based bank’s success has instigated the migration of the Clydesdale and Yorkshire banks to the platform.
Barclays, Royal Bank of Scotland (RBS) and NatWest customers experienced problems accessing mobile and internet banking over two days.
On Thursday 20 September, Barclays customers were unable to use the bank’s mobile banking app and the next day, customers of RBS and NatWest – both part of the RBS Group – were unable to use mobile and internet banking services.
Customers of the banks vented their anger on social media sites such as Twitter.
RBS said: “We are aware of some issues on our mobile app and online service and are working hard to fix them. Sorry and thanks for your patience. You can use our automated phone service for transfers, balances and statements.”
A Barclays spokesperson said: “We are very sorry about the technical problems our customers experienced. Everything is now back up and running, and we are really grateful for customers bearing with us.”
It would also look at how consumers suffer as a result of IT outages, such as the problems suffered by TSB earlier this year, and investigate whether financial services regulators have the skills needed to challenge companies over their IT.
Although banking IT outages have become increasingly regular, the problems experienced by TSB this year have heightened government interest.
TSB’s IT crisis began on 21 April, when it transferred customer accounts from Lloyds Bank systems to its new Proteo4UK core banking system. Customers began to experience serious issues with their mobile and internet banking services after the switch.
The short-lived coming together reflected the challenges faced by traditional banks that try to buy their way into digital banking without a compelling business strategy.
Fidor, which was launched in Germany in 2009 and gained a banking licence in the UK in 2016, was an early challenger bank. It quickly gained momentum through its disruptive tech-driven business model, before it was acquired by BPCE.
At the time, BCPE chairman François Pérol said: “This is a key step in the acceleration of the digital transformation of our group. It further demonstrates our commitment to innovation, to developing a customer-centric approach enabled by digital banking technology, and to be more involved in the digital and mobile banking field.”
This was part three of a series of interviews with finetch firms to shed some light on the kind of digital services available to enterprise IT directors via this growing sector. The interview was with Wrisk, a company in the insurtech part of the fintech sector.
The firm provides flexible insurance to suit people’s lives, with customer considerations at its heart and all delivered through the latest digital tech.
Wrisk had previously announced a big enterprise customer in the form of BMW in the UK. The German car maker’s UK arm was using Wrisk to offer insurance policies to customers for BMWs and Minis when they buy the cars through its UK dealers.
Wrisk’s insurance industry backer is Munich Re, which provides the insurance finance.
But today, with all the technical jargon replaced by marketing words of the same ilk, cloud computing is everywhere. While people might not understand what virtualisation is all about, they know what cloud computing offers the business.
In a similar vein, it is hard for most in business to imagine how blockchain will be used, despite lofty expectations driven by industry analysts. Gartner predicted that the business value-add of blockchain would grow to about $176bn by 2025 and would exceed $3.1tn by 2030.
More than half of people think cryptocurrency will be accepted in shops and on buses by 2025, with one in five already banking some digital currency.
A study of 2,000 people by lending platform Lendingblock revealed that most think cryptocurrency is here to stay, with 55% expecting shops and buses to accept it in seven years’ time. Just over 20% of respondents said they either own or have owned some cryptocurrency.
One-fifth of respondents said they were certain cryptocurrency is a good investment, and 56% said they might be tempted to acquire some in the future. One-third (32%) of people said better security would make them more likely to buy cryptocurrencies.
But as the popularity and value of cryptocurrencies have increased, so has cyber crime activity aimed at cashing in on this trend, mainly in the form cryptocurrency mining malware. According to a report from NTT Security, about 12,000 monero mining malware samples dating back to March 2015 have been identified by researchers at the company’s Global Threat Intelligence Center.