TSB: How it all went so wrong for the bank

All surfers know the feeling of being hit hard by a wave, being left bruised and disorientated, and then having to get up and do it all again.

TSB chief executive Paul Pester, a fanatical surfer, must have felt much the same each day for the last week.

His bank, which has five million customers, has been crippled by an IT crisis. Customers have been told time and again that normal service has resumed, an assertion they have furiously disproven.

Mr Pester now faces wave upon wave of questions and demands from customers, MPs, and regulators among others.

So how did it all go so wrong?

After years of planning, TSB shuts down various services for two days in a planned migration of customer data to a new IT system designed, it says, "for the digital age".

The process involves moving 1.3 billion customer records from the old system run by its former parent bank, Lloyds, to one managed by its new Spanish owner, Sabadell, saving £100m a year as a result.

The move had already been delayed. The initial plan was for it to happen last November. Now the bank claims it is ready.

"Our focus over the coming weeks is our existing customers - making sure everything is working exactly as it should be," the bank says.

It quickly emerges that after the Sunday evening switch-on everything is not working as it should. Customers' stories are far from the normal tales of online banking glitches which many people have told in the past.

Matthew Neal, from Hertfordshire, checks his TSB app on Sunday evening to find out his balance and see how much he had spent at the pub the night before.

"I could see all my accounts, but on top of that also three accounts belonging to someone else: a £35,000 savings account, an £11,000 Isa and a business account," he tells the BBC.

"I could see their account numbers, sort codes and transaction histories and I had access to transfer money too, if I was that way inclined. The thing that was worrying me most was: what if someone can see mine too?"

Laim McKenzie, from Paisley, in Scotland, signs into his app shortly after 18:00 on Sunday.

"I saw the details of one other account holder, as well as my own," says the 20-year-old. "My balance, because of my overdraft, is in minus, but my balance was showing at £13,000.

TSB says the "access issues", witnessed by Mr Neal, Mr McKenzie and others, lasted only about 20 minutes and only affected a tiny fraction of customers, and that they were fixed on Sunday night.

For the first, but certainly not the last, time, a spokeswoman for the bank says the app and internet banking "are now up and running again".

Customers say they are unable to log into their internet banking accounts, unable to transfer funds and unable to make payments.

The bank admits that there are "intermittent problems". The City regulator says it is aware of the issue and the Information Commissioner says it wants to know more about a potential data breach.

With comic timing, Sabadell - the parent bank in Spain - says the migration has been successful. The announcement will later be taken down from its website.

In his own words, Mr Pester, the bank's chief executive, has "resurfaced after 48 hours with my teams".

He apologises for the problems, but tells BBC personal finance correspondent Simon Gompertz that the bank is simply "tuning the platform".

Such fine tuning requires the app and online banking system to be taken offline for a few hours.

Customers are not happy. Among them is Lee MacDonald, who played Zammo in children's TV show Grange Hill in the 1980s.

Mr MacDonald, who now runs Mentor Lock and Safe Company in Wallington, Surrey, tells BBC Radio 5 live: "I'm having an absolute nightmare. I've got two accounts with TSB, both business accounts. My business has literally stopped. I don't know what money's coming in, what's coming out. When you're running a small business, every job counts and it's just a nightmare."

Despite the "tuning", the system remains off-key and Mr Pester is forced to apologise again, and promises nobody will be left out of pocket.

Nicky Morgan, chair of the influential Commons' Treasury Committee, is unimpressed. "Warm words and platitudes will not suffice. TSB customers deserve to know what has happened, when normal services will resume, and how they can expect to be compensated," she says.

The day that sums up the crisis for Mr Pester and TSB.

At 03:40 Mr Pester's pre-dawn tweet announces that the app and online banking are up and running again. "Thank you for your patience and for bearing with us," he tweets.

Many customers woke up to find that, in fact, nothing had changed. Not good if you have a wedding on the way.

TSB admits later in the day that half its customers cannot bank online owing to capacity problems. Its internet bank is operating at only 50% capacity, although its mobile app is at 90% capacity.

Apologies had already been published in national newspapers, but the editorials do not make happy reading for Mr Pester.

The Daily Mail's front page suggests that TSB stands for "Totally Shambolic Bank".

Mr Pester resurfaces on the airwaves.

Six days into the crisis, Mr Pester tells BBC 5 live's Sean Farrington that the bank is "on its knees" and that he has called in outside help.

Mr Pester, says he will take direct control of the issue. "Global experts" from computing giant IBM are flown in to Bristol. They will report "directly" to him.

Eyebrows are raised over the question of how much control he had of the process before this. Mr Pester, some of whose bonus depends on a successful migration, says he has not had time to think about his bonus or his own position.

He faces pressure from his own staff. One manager, who says the computer system is slow or crashes in the branch, tells the BBC: "Multiple staff members have been sent home physically and emotionally exhausted. I am desperate for chief executive Paul Pester to recognise how awful it is in the branches."

The fight to keep customers from switching to other banks also begins in earnest.

TSB promises that no customer would pay overdraft fees or charges for April, and that the interest on its Classic Plus current account for existing customers will increase from 3% to 5%. Estimates suggest this could cost the bank an extra £30m a year.

Another deadline is missed. Ms Morgan, who chairs the Treasury Committee, had requested a letter of explanation from Mr Pester by midday. It does not arrive until later in the day.

Meanwhile, IT experts explain that this is not the last time there will be problems for bank customers in the UK.

Philip Augar, a former non-executive director at TSB, says: "Bank systems have got sticking plaster all over them".

Nick Hammond, ex-global head of networks at Barclays and now lead adviser for financial services at World Wide Technology, says: "The crisis at TSB provides a great case study for the problems presented by the sheer complexity of many banking IT systems, and especially, the difficulty involved in changing them."

For TSB and the UK's banking sector as a whole, the waves are going to keep coming in, and they are going to prove difficult to ride.