Home / Payments / Do the issues at RBS show that Fred Goodwin’s era was 1000% incompetent?

Do the issues at RBS show that Fred Goodwin’s era was 1000% incompetent?

I know that it’s getting nearer to Christmas and the party season has kicked in, but yes, I’m still here blogging about banking business.

There were lots of headlines about the second major RBS payments glitch last week.  Here are just a few:

As can be seen, these headlines are global and across all media: public, industry and technology.

This is partly because a bank that cannot process a payment is bit like a restaurant that cannot serve any food, but also because this particular bank has suffered this problem twice.

Now I’ve written quite a lot about that:

As well as quite a lot about bank IT risk generally:

The bottom line is that banks are technology companies, and their core offer is based upon technical competence and excellence.  It is not just operational risk exposures that technical incompetence exposes, but far more issues of reputational risk.

As discussed by Alex Hawkes in last week’s Mail on Sunday. banks’ payment systems are like airlines.   If they never crash, you’re happy.  If an airline has a crash once, you get a little nervous but it does not impact your loyalty.  If they crash more than once, and very visibly as RBS’s crash has demonstrated, then you get much more nervous and think about switching.

And bearing in mind that the UK now has a much easier way to switch these days, with Santander and the Nationwide winning the switching battle, the exposures for RBS’s retail business are major.

Add on to this the issues in their investment banking business:

Impending oblivion for RBS investment bank, International Financing Review, November 2013

And commercial banking:

Royal Bank of Scotland faces claims of 'killing off' small firms, The Telegraph, November 2013 

And you wonder how this bank, once the world’s largest and most admired under Fred Goodwin, ever reached the stage it has reached.

Oh, maybe it had something to do with Fred the Shred's cost-cutting focus?

Oh, and what is that stage?

Cliff balance

 

Picture stolen from J. R. Ensey’s blog 

 

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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