TSB signs up IBM Services and announces Edinburgh tech hub

TSB is using cloud services from IBM to build a hybrid cloud platform to support its continued digital transformation, following an agreement which will also see the bank create 100 tech jobs in Edinburgh.

IBM will build and manage a private cloud for TSB and open up new technology such as artificial intelligence (AI) to the bank through public cloud services.

The IBM deal will see TSB’s core banking channels and applications such as ATMs, internet banking, mobile banking and high street branches run on a unified cloud.

As part of this TSB will create new technology centre in Edinburgh, creating 100 new IT jobs in the Scottish capital, including tech specialists, data engineers and analysts, which will open in April.

Suresh Viswanathan, COO at TSB, said the partnership with IBM marks the next phase of the bank’s transformation. “At a time when both the pace of change and the customer demand for new services is increasing, our partnership ensures our digital offering remains competitive and allows us to act faster to meet the needs of TSB customers,” he said.

The IBM deal is part of TSB’s plan to spend £120m on digital over the next three years, as announced by CEO Debbie Crosbie.

Crosbie took over as CEO after Paul Pester stepped down in September 2018 as a result of the massive IT disaster experienced by the bank in April 2018, when a core banking system migration went wrong.

The botched move from the systems of former Lloyds Banking Group, where customer accounts were hosted, to a platform known as Proteo4UK from new Parent Sabadell, left thousands of customers locked out of their accounts, with some experiencing money disappearing from accounts. IBM produced an initial report for TSB about the disaster.

There was a time when banks were reluctant to move to the cloud, but there is a wave of traditional high street banks such as TSB adopting cloud strategies. BNP Paribas and Bank of America are also working with IBM on hybrid cloud strategies.

Competitive tension and digitally savvy customers are two forces driving banks to the cloud. To keep up with the emerging challenger banks, many of which were but in the cloud, traditional banks need to build cloud native services.

Cloud-enabled challengers transition rapidly from idea to regulated finance provider, creating products and services quickly through cloud development. The cloud also allows traditional organisations to respond quickly to customer demand for products and functionality.

During a cloud discussion at SIBOS in London in December 2019, a snap poll of an audience comprising hundreds of bank executives revealed that 44% are already in the public cloud, 35% are catching up, 19% are considering it for the future and only 2% do not have it on their radar.

The snap survey also revealed that 37% are using the public cloud to complement on-premise systems with AI and machine learning capabilities, 35% as alternative to non-critical on-premise applications, and 28% for on-premise mission-critical applications.