Bank payday outages ‘will absolutely happen again’, tech expert says
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.
“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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Could ageing tech be behind banking outages?
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.”
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.”
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.
Four people have been arrested by police investigating cyber attacks targeting M&S, Co-op and Harrods.
A 20-year-old woman and two males, both aged 19, and a male aged 17, were detained in London and the West Midlands this morning as part of a National Crime Agency (NCA) operation.
They were arrested at their homes on suspicion of Computer Misuse Act offences, blackmail, money laundering and participating in the activities of an organised crime group.
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Electronic devices were seized from the suspects and are currently being analysed by forensic experts.
M&S halted online orders, and shelves were empty in shops after the cyber attack on the retailer earlier this year.
The initial hack into the retailer’s systems took place in April through “sophisticated impersonation” involving a third party.
Disruption is expected to continue at the retailer until the end of this month.
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The Co-op and Harrods were also subsequently targeted by hackers.
Paul Foster, head of the NCA’s National cybercrime unit described the arrests as a “significant step” in their investigation, which remains “one of the Agency’s highest priorities”.
He added: “…our work continues, alongside partners in the UK and overseas, to ensure those responsible are identified and brought to justice.”
The National Crime Agency is keen to “signal” to “future victims” the “importance of seeking support and engaging with law enforcement”, stating that “the NCA and policing are here to help”.
The NCA has also thanked M&S, Co-op and Harrods for their support in their investigations.
The arrests, which took place early on Thursday morning, were supported by officers from the West Midlands Regional Organised Crime Unit and the East Midlands Special Operations Unit.
Earlier this week, the chairman of M&S told MPs that the hack had been “traumatic” and like an “out-of-body experience”.
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Archie Norman, however, refused to be drawn on whether the retailer had paid any ransom.
“We are not discussing any of the details of our interaction with the threat actor, including this subject, but that subject is fully shared with the NCA,” he said.
It is estimated that the cyber attack will cost M&S up to £300m this year.
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Days after M&S was attacked, the Co-op was targeted and forced to shut down some internal systems.
Harrods was then hacked, and also had to shut some systems despite its website and shops continuing to operate.
Of those arrested, a 17-year-old British male and a 19-year-old Latvian male were from the West Midlands.
A 19-year-old man was from London and a 20-year-old woman from Staffordshire.
Royal Mail is to be allowed to scrap Saturday second-class stamp deliveries, under a series of reforms proposed by the communications regulator.
From 28 July, Royal Mail will also be allowed to deliver second-class letters on alternate weekdays, Ofcom said.
The post will still be delivered within three working days of collection from Monday to Friday.
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The proposals had already been raised by Ofcom after a consultation was announced in 2024, and the scale back was proposed early this year.
Royal Mail had repeatedly failed to meet the so-called universal service obligation to deliver post within set periods of time.
Those delivery targets are now being revised downwards.
Rather than having to have 93% of first-class mail delivered the next day, 90% will be legally allowed.
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The target for second-class mail deliveries will be lowered from 98.5% to arrive within three working days to 95%.
A review of stamp prices has also been announced by Ofcom amid concerns over affordability, with a consultation set to be launched next year.
It’s good news for Royal Mail and its new owner, the Czech billionaire Daniel Kretinsky. Ofcom estimates the changes will bring savings of between £250m and £425m.
A welcome change?
Unsurprisingly, the company welcomed the announcement.
“It is good news for customers across the UK as it supports the delivery of a reliable, efficient and financially sustainable universal service,” said Martin Seidenberg, the group chief executive of Royal Mail’s parent company, International Distribution Services.
“It follows extensive consultation with thousands of people and businesses to ensure that the postal service better reflects their needs and the realities of how customers send and receive mail today.”
Citizens Advice, however, doubted whether services would improve as a result of the changes.
“Today, Ofcom missed a major opportunity to bring about meaningful change,” said Tom MacInnes, the director of policy at Citizens Advice.
“Pushing ahead with plans to slash services and relax delivery targets in the name of savings won’t automatically make letter deliveries more reliable or improve standards.”
Acknowledging long delays “where letters have taken weeks to arrive”, Ofcom said it set Royal Mail new enforceable targets so 99% of mail has to be delivered no more than two days late.
Changing habits
Less than a third of letters are sent now than 20 years ago, and it is forecast to fall to about a fifth of the letters previously sent.
According to Ofcom research, people want reliability and affordability more than speedy delivery.
Royal Mail has been loss-making in recent years as revenues fell.
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In response to Ofcom’s changes, a government spokesperson said: “The public expects a well-run postal service, with letters arriving on time across the country without it costing the earth. With the way people use postal services having changed, it’s right the regulator has looked at this.
“We now need Royal Mail to work with unions and posties to deliver a service that people expect, and this includes maintaining the principle of one price to send a letter anywhere in the UK”.
Ofcom said it has told Royal Mail to hold regular meetings with consumer bodies and industry groups to hear their experiences implementing the changes.
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