TSB’s new owners should have seen this computer catastrophe coming

The systems breakdown at TSB is not (yet) the worst UK bank computer cock-up of all time: that prize is held by RBS, whose problems in 2012 afflicted customers for a month and attracted a £56 million fine. But the failure of TSB to migrate four million customers’ accounts from systems bequeathed by its former parent Lloyds to a streamlined IT structure, designed by new Spanish owner Banco Sabadell, is surely the fiasco that has been longest foreseen.

It dates from 2009, when Brussels insisted that Lloyds dispose of part of its branch network as a condition for the bailout that followed its acquisition of HBOS during the financial crisis. This was ‘Project Verde’: the plan was to rebadge 632 former Lloyds TSB and Cheltenham & Gloucester branches as ‘TSB’ and sell them to the Co-operative Bank — which turned out to have such troubles of its own that it was incapable of completing the deal. Instead, TSB floated on the stock market in 2014 under the slogan ‘Welcome back to local banking’ — but fell without protest to Sabadell within a year.

All the while, TSB accounts were ‘hosted’ on the Heath Robinson contraption that was Lloyds’ legacy computer systems. A lesson was offered by RBS, which scrapped plans to complete a similar separation of branches rebadged as Williams & Glyn — the cannier Spanish bank Santander having walked away from buying them for fear of systems incompatibility. But late last year, TSB chief Paul Pester announced the launch of a whizzing new platform, cloned from Sabadell, which would herald ‘the humanisation of digital’ and offer ‘unheard-of’ speed and flexibility. Now all he can do is grovel. Scanning a growing field of user-friendly, digitally-driven ‘challenger banks’, we might conclude that it’s easier and wiser to build one from scratch than buy a cast-off.