TSB mobile banking problems a reminder of risk of reliance on digital

Just days after TSB announced it was cutting one-third of its branches and hundreds of staff as a result of customers moving to digital banking channels, its mobile banking platform has hit problems.

Last week, the bank said it was closing 164 branches, leaving it with fewer than 300 UK branches to serve about four million customers. It also announced it was cutting 900 jobs.

TSB said the increasing use of digital platforms meant the bank would close the branches that had the fewest customers.

“Our customers are banking differently, with a marked shift to digital banking,” said TSB CEO Debbie Crosbie.

“This means having the right balance between branches on the high street and our digital platforms, enabling us to offer the very best experience for our personal and business customers across the UK.”

But just days later, TSB customers reported that they were unable to use mobile banking services.

One tweeted: “@TSB my banking app isn’t working again (had same issue a couple of weeks ago). Could you look into this ASAP pls as I have bills to pay today?”

TSB also took to Twitter to tell customers:  “We’re aware that a small number of customers have reported problems logging in to our mobile app this morning. These have now been resolved, so please try logging in again. We apologise for the inconvenience.”

TSB is not alone in reducing its branches, with closures accelerating across the sector.

In August, Co-perative Bank announced the closure of 18 branches and cut about 350 jobs, blaming the closures on low interest rates, economic uncertainty and the shift to digital banking.

And in January, Santander said it was closing 140 branches in the UK with 1,270 employees set to be redeployed or laid off, as app-based banking continued its ascent. The bank said the number of in-branch transactions had fallen by 23% over the past three years, while transactions via digital channels have almost doubled.

Banks have been shuttering branches for years as they attempt to cut costs and move customers into digital channels.

The Covid-19 lockdown, which saw bank branches closed and restrictions put on their activity when they reopened, has driven many consumers to use digital banking services rather than branches.

While contactless payments, mobile money management and mobile payments have increased in volume, banks are also offering face-to-face services via video link to customers who want human interaction when making financial decisions.

As branches close, banks will have to increase their investment in technology, both in customer-facing operations and the back office. With the option of visiting a branch to bank when things go wrong increasingly unavailable to many, banks like TSB will be expected to provide reliable alternatives.

TSB has the added challenge of repairing its damaged reputation following a monumental IT failure in 2018. During a major migration to its new core banking system, known as Proteo4UK, customers were unable to bank and TSB’s IT team were unable to identify why.