TSB refused help from Lloyds as IT meltdown began

TSB turned down an offer of assistance from Lloyds Banking Group when the migration of millions of customer accounts from Lloyds’ systems to TSB’s new banking platform went wrong.

On 21 April, when TSB transferred accounts from Lloyds systems to its new Proteo4UK core banking system, customers began to experience serious problems with their mobile and internet banking services.

Customers were locked out of their accounts and experienced money disappearing from online accounts, while some were even able to see other customers’ accounts.

According to the Financial Times, citing sources, TSB turned down an offer of help from Lloyds on the morning of 23 April when the scale of the problem was emerging. A few days later, the bank said it hired IBM to help fix the problems.

TSB CEO Paul Pester told BBC Radio 4: “I will take direct control from eight o’clock this morning for our platform, and I’ve drafted in a team of global experts from IBM.”

Lloyds systems had hosted TSB accounts from the time the banks were part of the same group and TSB was using the same system. Sabadell, TSB’s current owner, continued to pay a couple of hundred million pounds a year to Lloyds until it migrated accounts to its own platform.

Coming off the Lloyds Banking Group systems was the plan from the moment Spanish Bank Sabadell acquired TSB in 2015. This was not only to save it £160m a year, but also enable it to build its own digital services.

Proteo4UK, TSB’s new core banking system, is a UK-specific version of Sabadell’s existing core banking system, Proteo. If all goes to plan, Proteo4UK will support TSB in the digital banking age and enable it to challenge bigger banks by offering financial technology (fintech) services like some of the UK’s digital challenger banks do. It is also expected to save the bank £160m a year in costs.

In a bid to “put things right” following the chaos for customers, TSB is increasing the interest it pays to customers that use one of its current accounts. It is also waiving overdraft fees and interest charges that resulted from the problems.