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In April 2018 the bank named TSB, suffered a serious IT failure, which resulted in their customers not being able to access their accounts, having wrong information shown, accessing other customers information and transactions not being processed. This was a public relations disaster, with customers complaining across all forms of social media and the regulators and Members of Parliament demanding an explanation. Tere are many aspects of management accounting that can be considered in this situation, loss of control, the impact on variance analysis, risk management and of course the cost of the failure that took place. Regarding direct costs, it has been reported that:

“TSB is offering savers an interest rate rise and waiving about £10m in fees in a bid to persuade customers not to leave the bank, following an IT disaster that left many people unable to access their accounts online.

The Spanish-owned bank said on Thursday it would cancel all overdraft fees and interest charges for retail and small business customers for April, and increase the interest rate on its main current account from 3 to 5 per cent to say “thank you to our customers for sticking with us”.” (FT, 2018)

So, we can see that with the compensation we have some direct costs but what about the indirect costs that are not viewable immediately? The question is, how many customers will trust the bank going forward?  How many customers will leave the bank?  Will the suggested compensation be enough to satisfy the customers to stay with the TSB?  As part of a risk exercise, there will be lots of modelling happening behind the scene to consider the worse case scenarios and their risk management plan should have already considered such an outcome for a planned change in IT systems.

 

FT (2018) TSB IT problems – what are the customers’ rights. https://www.ft.com/content/55582946-4856-11e8-8ae9-4b5ddcca99b3 accessed 03/05/18