A catastrophic IT crash that affected 2 million customers at TSB and locked them out of their accounts last year was blamed on moving the banking technology to a new platform before it had been properly tested, according to a report by Reuters.
The crash cut parent company Sabadell’s profits by 50 percent last year. Law firm Slaughter & May investigated the failure and found the board at TSB didn’t “fully understand the scope and complexity” of how the new system was supposed to work. In the ensuing disaster, CEO Paul Pester was forced out of his position.
Sabadell’s IT arm, Sabis, wasn’t ready to use the new platform and one out of the two data centers it was going to use was not tested before the launch to see if it was going to be operational.
Sabadell said it was fully cooperative with TSB throughout the whole setup and beyond.
Sabadell bought TSB in 2015. It had to hire an additional 2,100 in staff to fix the issue, which was meant for the migration of customer data to a new system.
Because of the failure, customers were locked out of their accounts for weeks and couldn’t access their own money. There was also a rise in fraud attacks against the bank.
Because of the crash, TSB has struggled to regain its footing, even as its new CEO, Debbie Crosbie, is ready to outline a new strategy for the U.K. bank moving forward.
Part of the problem is a perceived delay in the publishing of the report, as well as an open investigation by regulators, the consequences of which are an unlimited fine, which could further affect stock prices and value.
Pester gave up bonuses worth about $2.6 million when he left TSB, and in a statement, he criticized the report, calling it a “scattergun approach,” and he said the blame lay more on Sabis.
“If these findings are right, Sabis rolled the dice by running tests on only one of TSB’s two new data centers and this decision was kept from me and the rest of the TSB board,” he said.