UK Bank’s Problems Give Perspective To Steward Bank’s Issues Last Year

Tinashe Nyahasha Avatar
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So got an email from one of Techzim’s most avid readers and he was asking us to do a comparison between what happened to a bank in the United Kingdom last week to the Steward Bank problems last year. This is quite interesting.

The problems at Steward Bank last year

I don’t think there is any business that fought a PR fire in Zimbabwe more than Steward Bank did last year. The bank had a series of downtime incidents inconveniencing customers. In early January last year online banking started to be a problem. As time went on almost everything started to turn on its head. People would get false bank balances, get charged fictitious transaction fees, some transactions would fail, balances would reduce even after transactions failed and reversing those transactions would take forever.

Officials from Steward Bank made countless promises about things normalising and problems being fixed but the promises were broken as often as they way made. Social media went into a frenzy and it would have been fair to assume the purple bank would not rise from the storm.

A bank in the UK went through this exact same thing last week

TSB is a UK bank which boasts 5 million customers. It used to be owned by Lloyds but was sold to a Spanish financial company called Sabadell a few years ago. The bank intentionally shut down various services like internet banking and funds transfer for a whole two days on the weekend of the 21st of April.

This was to migrate their banking system to what they called an IT system for the digital age. Come Sunday when the time to switch everything back up: problems started. Confidently the bank had announced that the migration had completed and it would be smooth sailing from then on.

The worst stuff to happen to a bank happened. Customers could see and access other random customers’ accounts! The bank then made an official statement that this had happened for a mere 20 minutes but everything was in order again. Except it wasn’t…

Customers could not access their internet banking or do anything using the bank’s mobile app. The whole week ended with the bank ‘fixing’ the problem and announcing that all was well and then social media going crazy as customers complained that things were far from fixed. This went on like a closed loop: Bank apologises and announces fix -> customers discover they still can’t use services -> customers shout at bank on social media ->  bank apologises and announces fix…

Sounds familiar?

Experts in the UK say this is not a simple problem

A guy called Nick Hammond, a Lead Financial Services Adviser at World Wide Technology and who used to be Global Head of Networks at Barclays had this to say:

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

Reporting on this madness at the TSB, BBC concluded by saying:

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.

OK! So Steward Bank’s issues were not as unique?

It seems time has exonerated Steward Bank. Not that we want to let them off the hook, no. But it seems banking IT systems are not as simple as we would imagine and especially if you want to change from one such system to another. At the time of these challenges Steward Bank was migrating to a system that would increase their capacity.

More clear in the rear view mirror

With the benefit of hindsight it looks like Steward Bank were actually brave to go through a digital migration. Surely if banks in the UK have to brace themselves for rocky storms as they change IT systems, Zimbabwean banks can’t expect any less. Steward Bank has already gone through it, perhaps the rest of our banks may have theirs soon.

The last becoming first

I mentioned at the time when the crazy was happening at Steward Bank that the purple bank was most likely going through the pain of being the pioneer in a different paradigm. They dared to think like a digital bank and they went for it. It could have killed them but the cliche is true, what didn’t kill them only made them stronger.

Their competition is now waking up to a situation where the youngest from among them is now the lead in a country that is going digital, a world were financial services are changing from just the buying and selling of money to facilitation of transactions.

It’s now a numbers game

It has always been a numbers game, just that the numbers used to be the net worth of your individual account holders. Already, this is not as important in Zimbabwe where banks’ profitability in the last 2 years has been growing pushed by transaction fees whilst generally interest revenue has been declining.

Steward Bank pioneered agent banking to open as many accounts as they could. At one time they reported that they were opening 3000 accounts per day. Of course the IT system was going to react to such volumes. However, the current business model for Zimbabwean banks favours whoever has the most accounts.

Decision to place tech at the centre

Back in 2015 when Steward Bank announced their first ever profit, they made it clear that technology was going to be their competitive leverage. It looks like they have followed through with that. Followed it through stormy IT migrations and followed it through by recruiting and restructuring around IT (buzz word is digital transformation).

Techzim reader who initiated this article might as well end it:

Our reader’s interpretation of things could be a good conclusion for now:

And the TSB IT problems too. They remind me of Steward Bank and its problems with IT . I feel these guys were unfairly blamed given how complex modern banking systems are. A comparison could be a great piece



  1. Imi Vanhu Musadaro

    I think you are trying to draw parallels based on distant similarities. The only similarities being that they are both banks and that they faced challenges after a migration. The causes of the failure at Steward and TBS are probably very different. What were the origins of the challenges faced by the banks in their migrations? Did they have similar quantities of data to migrate? The less the data, the quicker it is to migrate and test the said migration. Did either have previous experience with a similar migration? Have other banks migrated their banking systems, and why didn’t they face challenges?

    Another banks failure does nothing to exonerate Steward Bank. It’s accepting the mediocre simply because it happened in the 1st world. I doubt you’d be “justifying” failure had it happened to another 3rd world bank. Incompetence is also found in the 1st world.

    Even if Steward was opening 3,000 accounts a day, account creation has less of load on a banking system than the transactions is actually processes. And even if we also consider the added transaction processing volumes, that is something you are suppose to have planned for already at implementation. If they didn’t plan for it, it’s incompetence. Assuming they surpassed they anticipated number of accounts, or load, they also shouldn’t have continued adding accounts to the system. Again, if they did so just to get market-share, then that’s incompetence.

    1. Garikai Dzoma

      I think the similarities are uncanny. One of the things we like very much in the Finance world are ratios because often quantities in isolation can be very misleading. A popular example I like to give is of two businesses one makes a profit of $1 000 and another makes a profit of $1 00 000 which business did better? It depends how much capital did business A have and how much did business did B have? That is the question. Why am i mentioning this? Well it rubbishes your the less data you have the more easier it is to migrate because that only applies ceteris paribus. The question is how much resources visa vis the entire resources the banks had they set aside for the migration process. The bigger bank obviously has more customers and data but they also had more resources and could quickly get more expertise relative to what Steward could get.

      Failure is not something we should seek to justify but I think most customers do lack the appreciation of what goes behind the scenes when there is a migration going on. The thing is most banks sort of stumbled in the digital world. A lot have legacy disparate pieces of software they have accumulated of the years adding layers of complexity. Its like the proverbial house of cards.

      The morale in this article is migration is hard when you have interlinked complex systems especially in the finance world were the stakes of failure are quite hard. Most banks will go through the pain sooner or later. Some have already gone through this it’s just that their failures I less publicised. I bank with SC,ever since they decided to be more digital, we customers have had endless problems including constant ZimSwitch downtime.

      The difference a lot of Steward’s customers reacted with pitch forks at SC there is usually silence. These are high level clients compared to Steward’s so no they do not suffer mediocrity they just have a better understanding.

    2. Tinashe Nyahasha

      As Garikai said the article is not to exonerate Steward Bank (I even said it in the article) but to pose the possibility that the issue is not as simple as it may look.
      You are right about the first world bias. I know that the bias is implicit in the article and I am sure I have such bias but I think it emphasises the point more than take away from it.
      In the end this is an interesting case study that is worth following up on even by scholars