IT is always a nightmare. All of us can tell a horror story about the tech screwing everything up. And this has always been a particular menace for banks. Laden down with vast amounts of sensitive data, responsible for delivering a vitally important, always-on, service, yet saddled with ancient legacy systems held together with sticky tape and hope, nothing strikes greater fear into the heart of any executive than a big systems upgrade. So TSB Chief Exec Paul Pester must have gone into last weekend, as a huge IT migration project went live, with his heart in his mouth.
Turns out he was right to do so. Something went awry and online banking and the mobile app went down. But then the technical geeks really let him down: they couldn’t revive things for hours, then days, then a week. Cue lots of headlines about individual customers and especially small businesses suffering, and, eventually, stories about Mr Pester’s bonus or even his future in the firm.
This is of course grotesquely unfair. The CEO is hardly the only one to blame for this failure: also in the frame are underinvestment by Lloyds and current owners Sabadell, individual mistakes by so-called IT experts, poor planning by people lower in the hierarchy and just plain bad luck. So while the buck stops with Mr Pester, if he is forced out because of the tech going wrong he will have every right to feel let down.
However, much less forgivable is the way he and his team have communicated about the crisis they have faced. On Monday they said it was a minor glitch that had affected only a few people and had been fixed. Sabadell announced that the migration had been a success. Mr Pester disappeared. He reappeared on Tuesday to admit that things were not quite right but they would be soon. No one would be left out of pocket (a blank cheque that will come back to haunt him and the bank in the coming months).
On Wednesday the Chief Exec said everything was fixed but, errr, that turned out to be untrue. And so it went on. By the end of the week TSB had to bring in outside experts and concede that problems persisted. None of this was terribly pretty for Mr Pester.
So, yet again, Corporate Britain dishes up an example of what not to do in a crisis. Don’t set deadlines to solve a problem unless you know you will hit them; even worse, don’t say things are fixed when they are not. Don’t disappear for two days. Don’t make open-ended offers of compensation (because there will only be unfortunate headlines down the road). Do have a plan – something TSB appears to have forgotten. Rehearse your plan. Keep it up-to-date. And generally acknowledge the truth that its not normally what went wrong that gets you fired, its what you say about it.
So I’m afraid Mr Pester has let himself down – and that, in the end, may be why he has to go, or at least give up his bonus. He might also be said to have undermined his industry: one of the oddest side effects of this week’s events has been a small outpouring of angst about online banking and digital technology generally. Radio 5 Live, for example, held an entire phone-in about whether people felt they could trust online banking, with the implication being that we should all go back to paper and popping into the branch.
This, of course, is a pointless debate. Financial services is already being disrupted by new challengers, offering levels of convenience, customer service and speed of which a legacy bank like the TSB could only dream. Thus the other lesson from this week – besides needing to take crisis communications far more seriously – is that traditional FS providers, particularly mid-sized ones like TSB, are going to have to adapt, and quickly, or go the way of the dinosaurs. The ‘fat cat’ campaign launched by TSB only a few months ago is right: time for all old school institutions to take note.