Banks ‘investing heavily’ in digital platforms as payday glitch chaos strikes again
The banking sector is “investing heavily” in digital platforms, according to the body which represents the country’s lenders as many face a backlash over the latest payday glitch chaos to hit customers.
Millions were exposed on Friday to varying challenges from slow app or online banking performance to being blocked out of their accounts altogether.
Users said the brands caught up in the issues – which did not appear to be the result of a single problem – included Lloyds, Halifax, Nationwide, TSB, Bank of Scotland and First Direct.
It marked the second month in a row for payday problems and no reasons have been given for them.
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The industry has been historically reluctant to talk about the common challenges but its mouthpiece, UK Finance, told Sky News there was help available and protections in place during times of disruption while acknowledging customer frustrations.
The body spoke up as MPs and regulators take a greater interest in the resilience issue due to mounting concerns over the number of glitches.
All this comes at a time when major lenders face criticism for continuing to cut branch services at a regular pace – blaming ever higher demand for online services.
The UK’s big banking brands have been shutting branches since the fallout from the financial crisis in 2008, which sparked a rush to cut costs.
The uptake of digital banking services has seen more than 6,200 sites go to the wall since 2015, according to the consumer group Which?
The latest closures were revealed last month by Lloyds – Britain’s biggest mortgage lender.
Lloyds revealed in January that it was cutting a further 130+ branches from its network of brands. Pic: Reuters
Its announcements meant that it planned, across the group, to have just 386 Lloyds-branded branches left, with Halifax down to 281.
Bank of Scotland would have just 90 once the closure programme was completed.
Critics have long accused the industry of failing to sufficiently invest their branch closure savings in better online services.
But a UK Finance spokesperson said: “All banks invest heavily in their systems and technology to ensure customers have easy access to banking services.
“Where issues arise, they work extremely hard to rectify them quickly and to support their customers.
“Banks have been posting information on their websites and social media accounts to ensure they keep customers updated.”
Are banks doing enough?
Earlier this month, The Treasury committee of MPs wrote to bank bosses to request information on the scale and impact of IT failures over the past two years.
Their responses should have been received by Wednesday.
The letters followed an outage at Barclays which led to some customers being unable to access some services for up to three days from Friday 31 January.
The day marked HMRC’s self-assessment deadline alongside pay day.
The Bank of England has also been taking a greater interest in the issue for financial stability reasons.
The MPs sought data from the banks on the volumes of customers affected by glitches – and the compensation that had been offered.
Committee chair, Dame Meg Hillier, said then: “When a bank’s IT system goes down, it can be a real problem for our constituents who were relying on accessing certain services so they can buy food or pay bills.
“For it to happen at a major bank such as Barclays at such a crucial time of year is either bad luck or bad planning. Either way, it’s important to learn what has happened and what will be done about it.
“The rapidly declining number of high street bank branches makes the impact of IT outages even more painful; that’s why I’ve decided to write to some of our biggest banks and building societies.”
Foreign state investors would be allowed to hold stakes of up to 15% in British national newspapers, ministers are set to announce amid a two-year battle to resolve an impasse over The Daily Telegraph’s ownership.
Sky News has learnt that the Department for Culture, Media and Sport could announce as soon as Thursday that the new limit is to be imposed following a consultation lasting several months.
The decision to set the ownership threshold at 15% follows an intensive lobbying campaign by newspaper industry executives concerned that a permanent outright ban could cut off a vital source of funding to an already-embattled industry.
It would mean that RedBird IMI, the Abu Dhabi state-backed fund which owns an option to take full ownership of the Telegraph titles, would be able to play a role in the newspapers’ future.
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RedBird Capital, the US-based fund, has already said it is exploring the possibility of taking full control of the Telegraph, while IMI would have – if the status quo had been maintained – forced to relinquish any involvement in the right-leaning broadsheets.
One industry source said they had been told to expect a statement from Lisa Nandy, the culture secretary, or another DCMS minister, this week, with the amendment potentially being made in the form of a statutory instrument.
Other than RedBird, a number of suitors for the Telegraph have expressed interest but struggled to raise the funding for a deal.
The most notable of these has been Dovid Efune, owner of The New York Sun, who has been trying for months to raise the £550m sought by RedBird IMI to recoup its outlay.
Another potential offer from Todd Boehly, the Chelsea Football Club co-owner, and media tycoon David Montgomery, has yet to materialise.
RedBird IMI paid £600m in 2023 to acquire a call option that was intended to convert into ownership of the Telegraph newspapers and The Spectator magazine.
That objective was thwarted by a change in media ownership laws – which banned any form of foreign state ownership – amid an outcry from parliamentarians.
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The Spectator was then sold last year for £100m to Sir Paul Marshall, the hedge fund billionaire, who has installed Lord Gove, the former cabinet minister, as its editor.
The UAE-based IMI, which is controlled by the UAE’s deputy prime minister and ultimate owner of Manchester City Football Club, Sheikh Mansour bin Zayed Al Nahyan, extended a further £600m to the Barclays to pay off a loan owed to Lloyds Banking Group, with the balance secured against other family-controlled assets.
Other bidders for the Telegraph had included Lord Saatchi, the former advertising mogul, who offered £350m, while Lord Rothermere, the Daily Mail proprietor, pulled out of the bidding last summer amid concerns that he would be blocked on competition grounds.
The Telegraph’s ownership had been left in limbo by a decision taken by Lloyds Banking Group, the principal lender to the Barclay family, to force some of the newspapers’ related corporate entities into a form of insolvency proceedings.
The newspaper auction is being run by Raine Group and Robey Warshaw.
The DCMS declined to comment.
Burberry, the UK’s only global luxury brand, is to cut around 1,700 jobs worldwide over the next two years after reporting a steep financial loss.
The company lost £66m in pre-tax profit in the year ended in March as luxury goods sales fell across the world and the company weathered an “uncertain” environment and a “difficult macroeconomic backdrop”.
A year earlier, it recorded £383m in profit.
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It’s suffered in recent years with the share price falling to such an extent the business was removed from the FTSE 100, the index of most valuable companies listed on the London Stock Exchange.
Despite the financial performance, the company was upbeat, with chief executive Joshua Schulman saying “I am more optimistic than ever that Burberry’s best days are ahead and that we will deliver sustainable profitable growth over time”.
What cuts are being made?
The retailer did not specify any shop closures – in the past year, it closed 26 and also opened 26 stores – but did highlight shift cuts and consolidations.
“We don’t have a store closing programme, per see,” Mr Schulman told investors
The night shift at Burberry’s Castleford factory will be cut, it proposed, saying the shift has resulted in overproduction.
“Significant” investment in the facility will be made, however, as the ambition is to scale up British production “over time”, Mr Schulman said.
Changes to the retail network across the world will be made with shop staff being scheduled around “peak traffic”.
Burberry will be “realigning” shop staff, he said, “so that we can offer the best service” at the busiest times.
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There will also be a “simplification” of Burberry’s regional structure and a “rebalancing” of central and regional responsibilities to reduce duplication and “accelerate decision making” through the retail network.
But the majority of changes will be made to “office space teams” around the world, the CEO said.
Commercial and creative teams have already been consolidated, Burberry’s annual results said.
What’s gone wrong?
Aside from the global slowdown in luxury goods sales over recession fears, additional headwinds have come in the form of President Trump’s tariffs.
“Clearly, the external environment has become more challenging since mid-February”, Mr Schulman told investors.
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Tariff risks were higher than first planned, the annual results said.
It led the US market to be described by Mr Schulman as “choppy” since February when Mr Trump began announcing tariffs on Mexico, Canada and China, as well as on goods such as steel and cars.
Sales also fell in the Asia Pacific region by 16%, the results showed.
Criticism was levelled at the 2021 British government decision to withdraw VAT refunds for overseas visitors, “which has made the UK the least competitive destination in Europe for tourist shopping”, the results read.
“Business in our UK home market continues to be seriously impacted” by the move.
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