Payday banking outages will happen again but are unlikely to occur tomorrow, according to a banking technology expert.
Online banking failures on the final Friday of the last two months, payday for many, were seen as millions of customers of different institutions were locked out of accounts or unable to send or receive payments.
At the end of January, Barclays experienced problems in branches and online for days, while in February issues – which did not appear to be related – were encountered by Lloyds, Halifax, Nationwide, TSB, Bank of Scotland and First Direct.
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Similar outages “will absolutely happen again”, said Paul Taylor, chief executive of bank technology company Thought Machine, which sells cloud computing solutions to the banking industry.
Given the attention generated by the last two paydays, Mr Taylor said his guess is this Friday will be safe as every bank’s chief information officer is “super aware” of the day and that “it would be devastating for reputation if anything happened”.
The troubles, however, are not unique to the last two paydays but have just been more visible and complained about, Mr Taylor told Sky News.
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“My guess is that we’re talking about visibility, not occurrence. I’m aware of bank problems on paydays for many years.”
Through his job, Mr Taylor said he speaks to a major bank every day and counts Lloyds Banking Group as a client.
Why are glitches happening?
These issues will continue to arise as lenders grapple with “creaking infrastructure”, Mr Taylor said.
“The sheer volume of payments can overwhelm the bank, and that’s why it’s particularly susceptible on this [pay] day”.
“The problem that banks have is that the systems are old and the systems are fragile”, he said.
“One problem causes a knock-on effect, and that knock-on effect ripples through the bank, and then the end result is on payday that the payments don’t get made”.
Solving the issue is expensive and time-consuming, he added, even for banks that have enjoyed higher profits in recent years, thanks to elevated interest rates.
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Many banks are moving to more modern infrastructure, Mr Taylor said, but it takes time and banks don’t want to get it wrong.
But some are “so entrenched in this legacy technology”, he said.
The UK banks are “not that bad” when compared to international competition and each spend billions on IT every year, Mr Taylor caveated.
Despite this, no banks contacted by Sky News said glitches wouldn’t happen again.
What went wrong on paydays?
And when banks were asked what caused the glitches last payday, none responded with an explanation.
After parts of Barclays were down in January, the phenomenon began being investigated by the influential Treasury Committee of MPs.
As part of this, banks were asked to outline the outages they’ve experienced and why.
In the days before the February payday, nine top UK banks told the committee typical reasons for failures included problems with third-party suppliers, disruption caused by systems changes and internal software malfunctions.
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Those companies had a total of 803 hours of unplanned outages over the last two years, they said, equivalent to 33 days, comprised of 158 individual IT failures.
What have banks said?
TSB and Natwest referred Sky News to the banking lobby group UK Finance, which said it did not know what was behind the past two payday problems.
“The banking industry invests significantly in the resilience of systems and technology,” UK Finance’s managing director of operational resilience David Raw told Sky News.
“The ongoing investment means incidents which cause significant disruption happen very rarely,” he said
“Incidents can be short in duration, but if an issue does arise the bank will always work extremely hard to rectify it as quickly as possible and minimise the customer impact.”
Santander UK said it was not affected by the last two payday outages. “We have robust systems in place to ensure that our services remain operational for customers,” a spokesperson said.
“Since January 2023, our services have been available to customers for 99.9% of the time. When there is a disruption, our priority is to minimise its impact and restore services as quickly as possible and support customers through our alternative channels and ensure that no customer is left out of pocket as a result.”
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A spokesperson for HSBC, which also owns First Direct, said: “We continue to invest in our operational resilience to provide the best possible service for our customers”.
“The end of each month brings increased transaction volumes and heightened demand across the banking services industry, and so we plan accordingly – enhancing system capacity as well as limiting non-essential, back-end system changes and updates.”
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Nationwide, The Co-operative Bank, Lloyds – who also own the Halifax and Bank of Scotland brands – did not respond to Sky News’s request.
Barclays did not comment.
