What goes wrong, and what can we do about it?
Bank IT failures seem to have become one of the stories of our time; it seems like every few days there’s another story of customers locked out of their accounts or cards declined at the supermarket checkout as superannuated computer systems cause problems or come under external attack.
Fears over the condition of IT systems in the UK’s biggest banking groups have been rising over the last few years, as the issue begins to emerge into the public consciousness with a series of high-profile failures.
Notable high street bank failures
Some of the more notable failures of recent years have affected the major High Street Banks. The first to enter the public consciousness for many people occurred in 2009 when a server failure in Gloucester blocked thousands of Barclays’ customers from withdrawing cash and using their internet banking service. More embarrassingly for customers, some card payments were also declined leaving them unable to pay for goods in shops.
So far the most notorious failure was that which hit the RBS group in 2012. On that occasion, problems with IT systems left customers unable to access their accounts for days with Royal Bank of Scotland itself and its subsidiaries, the NatWest and Ulster Bank, also being affected. The bank landed a fine of £56 million from regulators after the incident, which occurred as a consequence of problems encountered during a software upgrade.
During an incident in the same year, Lloyds Bank cards were rejected and cashpoints failed when the internet banking service was unable to connect to customer accounts. Lloyds Bank itself, as well as Halifax and Bank of Scotland customers, were widely affected. A simultaneous, but unrelated problem affected customers of the Coop bank. In 2014 Lloyds suffered another major outage when its cash machines were shut down for several hours leaving customers without access to their funds.
Though not the biggest failure, but one of the most infuriating for customers, took place on the busiest shopping day of the year in December 2013 when another glitch prevented RBS customers from making online and card payments in shops.
Earlier this year, a problem at HSBC prevented thousands of payments via BACS from being processed leaving individuals without wages over a long weekend, and other payments were delayed considerably. On another occasion this year, RBS was hit by a Distributed Denial of Service (DDoS) attack, which took the form of a deliberate overload of IT systems preventing customers from accessing their bank accounts for almost an hour.
We’re not alone
It’s not just the biggest British banks that are being affected by such problems. Both Sainsbury’s and Tesco’s banking customers have also been left unable to access their accounts in recent years and nor are foreign banks immune.
System problems at one of Japan’s largest banks during 2012 saw 5,600 ATMs go offline for 24 hours and internet banking services were shut down for three days. In Sydney, Australia, Commonwealth Bank cash machines began dispensing large sums of money due to the system being in stand-by mode and failing to identify account balances correctly.
What can be done?
So what’s causing all these problems and how can they be avoided? The history of banking growth in recent years has seen the rapid expansion of a small number of banks, with numerous acquisitions and mergers taking place. However, during the same period less investment has been made in IT infrastructure, underpinning the organisational efficiency. It’s this failure to invest in what’s increasingly the most vital component of the banking sector that’s paved the way for major failures.
A consequence of this massive expansion has been a tangle of legacy systems inherited from assimilated business units being lashed together without any overall strategic system plan. The inherent weakness of some of these systems, many of which are thirty or more years old and handling millions of transactions daily with only piecemeal patching up, provides a recipe for disaster for systems unable to cope with the pressures of increasing daily usage.
After the upheavals of recent years it’s now clear there’s a great need for consolidation within the industry and some serious investment in stable systems to support the current level of transactions, whilst also allowing for the next round of growth and the demands of ever-increasing security to be incorporated within functional banking IT infrastructures.
At Ribbonfish, we specialise in reliable and scalable enterprise technologies. We integrate and update legacy systems, migrate data, and ensure uptime. For more information about what we’re able to provide to the financial sector, get in touch today.