Why Are So Few Customers Leaving a Bank that Trampled on Them?

Despite months of IT mayhem and all kinds of problems, customers cling to TSB Bank in the UK.

After months of self-inflicted IT chaos at mid-sized UK lender TSB, caused by botched data migration to a new IT system in April, things were supposed to have returned to some semblance of normality by now. But new problems keep cropping up. And once again, customers are feeling the brunt of the financial pain and inconvenience.

Last Wednesday, TSB’s online banking system crashed again, albeit briefly. Two days later, the bank was forced to issue yet another apology to customers, this time for failing to send out debit card replacements to about 40,000 account-holders whose cards are due to expire on August 31. TSB has been scrambling to dispatch new cards. But thousands of customers are unsure they will have a usable debit card by Friday.

This week began in ominous fashion, with an announcement from TSB that it was delaying a long-planned transfer of millions of customers from Visa debit cards on to Mastercard. The “big-bang” migration was scheduled to take place later this year, but instead has been pushed back until 2019. A person close to Mastercard told FT that the debit card delay was likely to have costs for TSB.

TSB’s IT fiasco, now in its 21st weekhas already cost its parent bank, Spain’s Banco Sabadell, €203 million in losses, which included €40 million from fraud losses and €92 million to cover future customer claims.

This is likely to be just the tip of a very large iceberg…

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