Playing Your Cards Right Can Beat Bank IT Outages

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Bank customers should open accounts with more than one provider to avoid going short of cash and account lockouts.

In just 12 months, British banks reported 265 IT shutdowns ranging in time from less than hour to more than a week – up from only 37 the year before, according to a report from consumer watchdog Which?.

The study reveals three out of four customers bank with one provider and that nearly a third carry no cash and rely on card or online banking payments.

Another issue is who provides the cards.

Typically, even if a bank customer has multiple cards, they are likely to be with the Big Three – Visa, Mastercard or Amex.

Lock-outs hit one in seven bank customers

A system crash would leave them unable to use their cards or to withdraw cash over-the-counter.

The problem is outdated ‘legacy’ computer systems that are up to 50 years old that struggle under the stress of a modern web-based banking system.

Industry insiders argue the cost of running these systems is massive and that banks would be better investing in new technology built from scratch.

The research disclosed one in seven people could not pay with a card last year due to an IT outage, with half complaining they were stranded and unable to pay for goods or services at the point-of-sale.

Which? is calling on banks to invest in modern technology rather than patching out-of-date IT that is inevitably likely to fail.

Call for tougher rules and fines

Jenny Ross, Which? Money Editor, said: “We found that most people only have one payment option, leaving them especially vulnerable to being shut out of payments by IT outages that hit bank customers almost every day.

“If the industry wants to encourage people online then banks must demonstrate that their systems are up to scratch by drastically reducing the number of outages that customers endure.

“It’s clear the government should introduce legislation to protect cash – not just for all those reliant on this payment method – but as a vital backup when digital systems fail.”

The Treasury Committee made of MPs from all parties has already investigated the problem and slammed the banks for offering an ‘unacceptable’ service.

They want City regulator the Financial Conduct Authority to step in with tougher rules and stiff fines for banks that break them.

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