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TSB: How we’d have done it differently

As the collapse of the TSB online services approaches the 8th day with no soon end in sight, we draw our attention to exactly how something of this scale could have come about. Following TSB’s separation from Lloyds, there was little to no advancement of their centralised systems, instead they remained as they always have been – antiquated and complex.  Following the sale of Lloyd’s to Sabadell, the new bank spent a whopping £450 million on upgrading their systems to accommodate TSB’s customers, but the migration to the new systems relied on the data coming from these complicated legacy systems.

All banking systems and technologies as we currently know them have an expiration date; if they don’t develop and grow alongside changing markets and their client base, a crisis is inevitable. Even, as in this case, when new systems have been developed, migrating data from old to new is expensive and complex.  Where those legacy systems are not fully understood or supported, disaster can strike.  

Although from an outside perspective, the largest damages are seven plus days of customer disruption, internally the scale of damage this has caused is much higher. TSB boss Paul Pester has told the BBC the bank is “on our knees” – fallout is going to send internal development back months, or possibly even longer, making it ever harder long term for the bank to bounce back; a similar crisis six years ago at RBS/NatWest set back strategic development more than six months.

Now let’s talk about DLTs (Distributed Ledger Technology) or blockchains as deployed by hiveonline, and how they can ensure something like this is easy to avoid. With Distributed Ledger Technology, although all private, sensitive information is wholly owned and private to the individual customer, transactions are tracked on a global network.

This prevents fraud and ensures that your money goes where it should, but a massive benefit is that there is no centralised system to “crash”. A large trading server goes offline, but there are still copies of the ledger throughout the platform, supported by its users. No one loses service, and businesses relying on the platform, as so many did with TSB, won’t lose income, profit or customers.

What many may not think of, is the individual effect an online banking crisis may have to small private business owners. A lack of access to online banking can mean a complete hold on a week’s trade. For many out there that could even end in no food on the table.

Although TSB is now working round the clock to resolve the issue, the fact is that the issue was created by the existence of centralised systems so old and complex that nobody really understands how they work. Moving forward, finance can no longer rely on these antiquated structures. We need to move technology forward, with customers at the front of our minds.