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ANALYSIS


IBS Journal June 2018


11


Fire, brimstone and a botched core banking switch


UK bank TSB had been waiting years to swap its aging core for a modern, purpose- built system. What should have been a weekend of celebration turned into every technologist’s nightmare. Alex Hamilton charts the journey from optimism to despair


Senior Fintech Reporter Alex Hamilton


C


ore banking switchovers are often compared to trying to replace an aircraft’s engine while cruising at 30,000 feet. Many a project manager has woken in a cold sweat after


nightmares about missed deadlines, systems hiccups and social media meltdowns. There are always cautionary tales out there with which to frighten the IT teams and the implementation partners. UK challenger bank TSB has catapulted itself amidst the greatest and costliest with a core banking mishap for the ages.


UK regulators greenlit a £1.7 billion ($2.6 billion) takeover of TSB by Spanish giant Banco Sabadell in mid-2015. At the time of the takeover, TSB had a network of 630 branches across the UK, as well as five


operations centres and some 4.6 million customers. The bank was making healthy, if not exceptional, annual revenues of £900 million.


Yet, there was a problem at the centre of TSB. The bank was running on core banking software provided by its sister bank, Lloyds Banking Group. Maintenance for the systems was costing TSB between £100-£200 million per year. Sabadell immediately set to replacing the software with a bespoke version of its own technology.


The incoming system, Proteo4UK, was a modified version of Sabadell’s Proteo core banking software, itself an offshoot of Accenture’s Alnova retail system. The Spanish company allocated three years and a


www.ibsintelligence.com


Tim@SW2008/Flickr


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