Following the news that British lender TSB Bank was fined $48.65m ($59.07m) by the Financial Conduct Authority and the Prudential Regulation Authority over “a botched IT platform migration that left two million customers locked out of their accounts in 2018,” Chris Dinga, Payments Analyst at GlobalData, offers his view:
“Prior to making the transfers, TSB could have tested the system to see how it would respond to the migration. Instead of attempting to migrate 1.3 billion customer records over two days, TSB should have staggered the data migration over a period of several weeks to monitor the process and identify any potential risk.”
Chris added:
“During the IT failure some customers were at the risk of seeing their personal bank details being exposed and their funds being stolen. According to GlobalData’s Financial Services Consumers Survey H1 2022*, 20% of UK respondents reported closing their account after experiencing a fraud.”
As noted in the update, this incident “raises concerns not only on the current IT infrastructure of TSB Bank but also of other financial institutions.”
The GlobalData team also shared that the banking industry “relies on complex IT infrastructures, and it is possible that in the future other financial institutions experience the same issues if they do not improve their current IT infrastructure.”
GlobalData added that COVID-19 has “forced many institutions to consider adopting cloud technology to improve their infrastructure to make them more responsive and easier to deploy new solutions.” But if those cloud migrations are not done correctly, “we will see similar issues repeat themselves.”
As mentioned in the update:
“While the migration was meant to save the TSB £100m ($121.50m) annually, 80,000 customers left the bank in 2018 following this issue and in February 2019 it had already cost the bank £330m ($400m). The reputational damage to the institution can take years to recover from. GlobalData’s Financial Services Consumers Survey H1 2022 covered over 40 countries and had 49,776 global respondents and 4,974 respondents in the UK.”
As mentioned in the announcement, 4,000 of the world’s largest companies, “including over 70% of FTSE 100 and 60% of Fortune 100 companies, make more timely and better business decisions thanks to GlobalData’s unique data, expert analysis and innovative solutions, all in one platform.”
GlobalData’s mission is to help clients “decode the future to be more successful and innovative across a range of industries, including the healthcare, consumer, retail, financial, technology and professional services sectors.”