When you think about it, a modern bank is nothing more than its IT core system and confidence. There is no gold in its HQ any longer, or incredibly wealthy owners or partners; RBS’s shareholders are certainly much poorer than they were. So, if people were worried about not being able to get their money out of Northern Rock, which at least knew how much they were supposed to have, how worried should they be about RBS, NatWest and Ulster Bank? And how, exactly, does the FSCS Guarantee Scheme work if the bank doesn’t know how much money you have? The irony is, of course, there was a run on Northern Rock when they knew what you had and gave it to you if you wanted to take it out. Not the case at RBS, NatWest and Ulster Bank.
On the technology side, everybody is corrrect when they say that RBS should have been able to simply reverse the ill-advised ‘upgrade’ or switch to reserve systems. However, having worked in mission critical, mainframe and heterogeneous production environments, I can tell you now that you never want to get to that stage, as it is fraught with dangers, as is now being demonstrated. This is a monumental cock-up and it is down to not having proper technology leadership, sacking nearly all the people who understood how these systems work (in many cases the people who wrote and designed the scripts and programs) and adopting cheaper and more dangerous methods.
If banking truly was a competitive market, rather than an oligopoly, all of RBS’s competitors would be running advertisements right now, bragging about their superior systems and offering incentives for customers to switch. No sign of that at all.
It has taken Hester since Tuesday evening to say anything at all about this disgrace, by far the worst retail banking IT disaster in my lifetime. Even then, it appears to be a press release rather than a proper radio or TV interview. But he’ll run into the Radio 4 Today studio to defend his salary and bonus. Hester infamously said his own parents were embarrassed by his excessive pay – well now his parents can be excessively embarrassed by his infamous incompetence too.
Who, out of the senior management which signed this off, who thought ‘IT is not at the heart of what we do, let’s outsource/offshore it’, who decided ‘these guys in India know what they are doing’ is going to take responsibility for this fiasco? I am also perplexed about how the FSA thinks holding a banking licence is compatible with being unable to produce balances for a week.
If you’re a customer, these are the two questions you need answered next week:
1. Is NatWest/RBS going bring the design and maintenance of its IT infrastructure back to the UK and under its control?
2. Has Susan Allen, Director, Change and Business Services, responsible for ‘Transformation Programme across the Retail Division encompassing all channels and functions. Establish Lean capability. Ensure services provided by Business Services (IT, Ops, Property) support delivery of the objectives of the RBS UK Retail, Wealth and Ulster businesses’ resigned yet?
If the answer to either question is no, move your accounts to another bank next week. If you can, if the systems are working again before the next IT disaster. Frankly, businesses should just move their accounts in any case.