RBS boss says sorry for decades of penny-pinching on IT: RBS boss sorry for failures of IT investment
(Guardian (UK) Via Acquire Media NewsEdge) The boss of RBS admitted yesterday that the bank would have to put right decades of underinvestment in its computer systems that have led to embarrassing IT failures barring customers from accessing their accounts.
As one City analyst suggested the problems would cost the state-owned bank as much as pounds 1bn to put right, the chief executive, Ross McEwan, apologised for the "unacceptable" technical faults.
Despite assurances from the bank that the latest problems had been resolved, customers were still reporting problems yesterday following Monday's glitch, which saw millions unable to pay by card or withdraw cash on one of the busiest shopping days of the year.
McEwan said: "Last night's systems failure was unacceptable. Yesterday was a busy shopping day and far too many of our customers were let down.
"For decades, RBS failed to invest properly in its systems. We need to put our customers' needs at the centre of all we do. It will take time, but we are investing heavily in building IT systems our customers can rely on. We know we have to do better."
McEwan said he would be announcing plans to improve RBS in the new year. After RBS bought NatWest in 2000 it was lauded for making huge cost savings from combining the two banks' IT systems, but lack of investment has come back to haunt it.
Ian Gordon, a banking analyst at Investec, said: "Ross McEwan isn't the first RBS leader to acknowledge there had been an extended period of underinvestment going all the way back to the NatWest deal. I don't think it's wildly inaccurate to imagine RBS spending pounds 1bn over a period of time to put things right, but that isn't a number you will see in any given period."
Union leaders have claimed cost cutting was to blame for the faults on Monday evening and called on the bank to halt its redundancy programme.
Unite, Britain's biggest union, said the 30,000 job losses announced by the bailed-out bank since 2008 and the offshoring of IT functions had left it unable to provide a proper service to customers.
Dominic Hook, Unite national officer, said: "It is unacceptable that the bank's customers are once again facing inconvenience. Unite has grave concerns that staffing challenges are exacerbating the problems facing the bank, challenges that could be further amplified when the chief executive announces the outcomes of his strategic review in February. Serious questions must be asked as to why constant job cuts are being made when there are clearly serious issues which need addressing by management."
Earlier yesterday RBS took to Twitter to apologise to furious customers, promising to compensate those left out of pocket as a result of the failure at RBS, NatWest and Ulster Bank, which mainly affected customers between 6.30pm and 9.30pm on Monday.
There were reports of trolleys full of shopping abandoned in supermarkets and people unable to pay for their petrol as the bank's customers were unable to withdraw cash and debit cards were declined. Others found that their accounts were overdrawn when there should have been funds available. Typically, about 250,000 RBS customers will use a cash machine every hour.
RBS said it would not be compensating customers for inconvenience or time wasted, focusing instead on those who had incurred costs.
The bank insisted the issues affecting customers on Monday had been resolved, while conceding that some customers were still having difficulties.
A spokesman said: "The system issues that affected our customers last night have now been resolved. If any customer is experiencing issues they should get in touch with our call centres or come into our branches, where our staff will be ready to help."
Susan Allen, director of customer solutions at RBS, said it was still unclear exactly what went wrong. "The investigations would suggest it is completely unrelated to the volumes on Cyber Monday." Allen insisted the bank would "put this right for customers".
Some customers were angry about the lack of communication. One Guardian reader, petey123, wrote: "So nothing on their website or by email about this, until I find out on the Guardian why my card wasn't working. Oh, but you put it on twitter. great."
The failure is a huge embarrassment for RBS, following similar glitches 18 months ago when IT problems locked many customers out of their accounts for several days. It cost the bank pounds 175m to fix the problem and pay compensation to the customers affected. Stephen Hester, RBS chief executive at the time, waived a bonus potentially worth more than pounds 2m as a result of the disruption in June last year.
It comes at a low point for RBS amid allegations that it is deliberately wrecking viable small businesses to boost profits. City regulators and the bank are investigating the allegations.
Data security company Check Point warned RBS, NatWest and Ulster Bank customers to be wary of phishing emails sent by cyber-attackers to trick them into revealing their full bank details.
Ross McEwan: 'For decades RBS failed to invest properly in IT. We need to put our customers' needs at the centre of all we do'
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(c) 2013 Guardian Newspapers Limited.
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