Top 10 financial services stories of 2018

1. TSB IT meltdown has the makings of an epic

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.

2. Visa blames hardware failure for UK-wide card payment system outage

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. 

3. FCA deeply concerned as no end in sight for IT failures in banking

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.

4. CIO interview: Fraser Ingram, Clydesdale and Yorkshire Bank

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.

5. RBS, Barclays and NatWest customers suffer more mobile banking outages

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.”

6. Treasury Committee launches inquiry into bank IT failures

Parliament’s Treasury Committee launched an inquiry to find out why banking IT failures continue.

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.

7. Fidor Bank to separate from BCPE after short marriage

French banking giant BCPE was selling challenger bank Fidor, which it acquired In July 2016, to accelerate its digital transformation.

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.”

8. The fintech interview: Part 3 Wrisk

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.

9. Filling the blockchain chasm

Blockchain is in much the same position now as cloud computing was a decade ago – everybody is talking about it, but a lot of what is said does not make sense to most people.

It could be argued that cloud was not properly understood until Salesforce and its simple-to-understand software as a service (SaaS) began to attract interest from enterprise customers.

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.

10. Most people think cryptocurrency will be accepted on buses by 2025

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.