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  • Scott McLeod

TSB - an update

While we're trawling through the reams of comments about the Royal Commission final report, TSB in the UK have posted their annual results so I thought I would take the opportunity to review the impact of the core banking migration outage in April 2018.


Losses before tax for 2018 were £105.4 million, mainly due to post-migration costs of £330.2 million, including:

  1. Customer redress, rectification and associated remediation resource costs of £125.2 million

  2. Fraud and operational losses of £49.1 million

  3. Additional resource and advisory costs to support the remediation of systems and operating defects of £122.4 million

  4. Foregone income of £33.5 million relating primarily to waived fees and charges as a result of the service disruption

  5. These costs were partially offset by the provisional recovery of £153.0 million from TSB’s IT provider, Sabis.


Around 140,000 customers opened a new bank account or switched their account to TSB in 2018 balanced against around 80,000 customers who switched their bank account away from TSB in 2018 with volumes peaking in Q2.


It is clear that the outage had a significant impact on the bank's ability to grow its loan book due to the senior management focus required to resolve the migration issues.


In summary, instead of saving the £200 million p.a. it was paying Lloyds to use its core banking system, TSB paid the initial migration costs of £417.3 million AND post-migration costs of £330.2 million. So around £750 million one time costs to migrate the core banking system. Bet that number wasn't on the business case for the migration!


The initial IBM report into the migration disaster was published in June 2018 and laid the blame on the lack of rigour in testing, saying IBM "has not seen evidence of the application of a rigorous set of go-live criteria to prove production readiness". The report is available here.


Due to the way TSB handled the fallout due to the migration, this will be a case study for IT & PR students of what not to do.


More detail is here and here.

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