August 2, 2018

Don’t bank on your reputation after an IT meltdown

IT Meltdown Reputation Banking

If data is the oil of the 21st Century, we’ve had a few major spills in recent months.

Similarly, following lofty proclamations about technology improving customer experiences and driving operational efficiencies, recent high-profile IT failures have made this look like hubris.

The most spectacular and widely reported spill came via TSB, when in April of this year its entire IT infrastructure crashed. This left many customers unable to access their account for days, generating over 130,000 complaints in the process.

TSB has not been the only one to suffer technological issues, with household names such as Visa, Lloyds and Mastercard all experiencing crises of varying degrees.

But how does this impact a company’s reputation?
In short, an IT crisis is likely to have a significant reputational impact for the company at fault. However, for financial services – particularly the banking and payments industries – the reputational risks are arguably the highest.

With more of us managing our bank account online than ever before (63% of people in the UK using internet banking in 2017) IT meltdowns are more likely to impact the lives of consumers than ever before.

This comes at a particularly sensitive time too. Since last decade’s financial crisis, the banking and payments sector has worked overtime to repair its reputation. Organisations have had to convince consumers to trust them again by committing to exceptional standards of customer service and develop new product lines. Clearly, IT failures and system outages can easily unravel the work done over the last 10 years in a matter of hours.

Fundamentally, in a world where we now prefer to bank online than visit our local branch, companies operating in banking and payments sector need to seriously consider the impact an IT fiasco could have on their reputation.

For TSB, its IT meltdown has already made its impact felt. Last week, it reported a half year loss of £107.4m, compared with a profit of £108.3m in the same period in 2017.

So, what can be done to mitigate these reputational risks?
At the very least, from a preparedness perspective, companies in the banking and payments sector must establish communications protocol in the event of an IT crash or data breach.

Who are the point people to manage the communications response? What channels will be used? What are the steps for sign off on statements? And many more. As a business, if you haven’t answered these questions, then your risk profile is already heightened.

Once a breach or technology issue arises, companies must act fast and communicate the full extent of the problem and how they intend to fix it to their customer base. Increasingly, many companies are turning to social media to communicate directly with customers, which has the main advantage of keeping them up-to-date with the situation as it unfolds.

One of the main criticisms of TSB was that it was slow to communicate externally and even then, only limited information was given.

Beyond the maelstrom of an initial crisis, in the medium to long term companies must think carefully about how they communicate their approach to IT security. The message must be consistent – whether it’s a formal announcement to the market, or information posted on their website.

Companies should deliver two or three key points that explain how they are protecting their customers from damage caused by major IT outages. This could be the technology they have in place, their compliance with industry and regulatory requirements, or their excellent track record of reliability and uptime.

Ultimately, IT issues in the banking and payments sector will likely get worse before they get better. In the last four years alone, online banking fraud has increased by nearly a quarter (23%).

But establishing communications protocol to deal with the short-term fallout and long-term implications of a major IT issue will go some way to helping a company repair, and possibly save, its reputation.

While it’s impossible to sweep an oil spill under the rug, it is entirely possible to explain how it happened and the plans in place to stem the flow.