“[W]e have this house of cards where you’ve got an awful lot of institutions working co-operatively with each other, but if one messes up the system, then the whole system fails.”
Given all the drama generated by Donald J Trump’s tariff tiff over the past few days, readers could be forgiven for not knowing what just happened at Barclays Bank, one of the UK’s “big four” lenders and one of the 29 “Global Systemically Important Banks”, or G-SIBs, designated by the Financial Stability Board as officially too big to fail. Even some British readers may be unaware of the developments given they did not make it to the front pages of the nation’s newspapers.
So, what happened?
Barclays suffered an IT system outage that lasted almost 48 hours, from Friday afternoon til Sunday morning, leaving many of its customers unable to do even the simplest of things on the bank’s app, online platform or telebanking service including making payments. Then, on Monday morning, just hours after Barclays’ resolved its “technology issue”, Lloyds Bank, another “big four” lender, suffered a four-hour outage that affected not just Lloyds’ online services also those of its subsidiaries, Bank of Scotland and Halifax.
But it was the far longer Barclays outage that caused the most chaos and consternation. This, after all, is one of the world’s most systemically important banks, and its payment system stopped working for many of its customers for close to 48 hours. That is a long time for an IT outage to last, especially at a TBTF lender. Plus, the outage occurred at the worst possible moment for its customers: on the afternoon of the last Friday of the month — aka Payday. It was also the deadline for self-assessment tax returns.
The banking areas affected by the glitch included Barclays and Barclaycard apps, online banking and services, cards, payments and transfers, branches and telephone banking. More than 600 Barclays customers had reported problems by 1000 GMT on Sunday, including failed payments and incorrect balances being displayed. Presumably, many others suffered problems without reporting them. Some customers were locked out of their accounts altogether.
Many customers took to social media to air their grievances. Some reported being unable to buy shopping for themselves and their young children, pay their bills or withdraw cash. Yet the bank insisted that its ATMs were unaffected.
The bank’s crisis management and communications appear to been found wanting. For example, when an X user called Olive said she had “no access to money” because of the outage, the Barclays UK Help account asked: “Are there any friends or family who can offer support?” When she said there wasn’t and described the reply as “so triggering”, the bank’s X account posted links to the Trussell Trust, a charity that runs food banks, and the Citizens Advice Bureau.
The message was clear: Olive, temporarily, had no recourse to money, through no fault of her own, of course — her bank was just having a “technological” issue — and like anybody in the UK who has no money, her best option was to head down to the local food bank and hope there were still stocks available.
Other affected customers, according to the BBC, included at least two separate instances of home-movers left “effectively homeless” on Friday when their transactions involving funds in Barclays failed to complete, as well as businesses who complained of losing thousands of pounds in rejected payments.
As Reuters notes, “disruption of online services has been a persistent problem for banks in the UK in recent years, and an acute one because lenders have increasingly encouraged customers to bank online to help them reduce fixed costs.”
“Encourage” is an interesting choice of words given that many bank customers had little choice in the matter. Over the past decade, the UK’s big banks, including Barclays, have ripped away the choice of in-branch services for many of their customers through their ruthless cull of branches across the nation’s towns and cities. Since 2015, more than 6,000 bank branches have been closed in the UK. Meanwhile, the number of ATMs has fallen from a historic maximum of 70,000 in 2016 to under 50,000 today.
The trend is ongoing (and is unlikely to change even after this latest outage)…
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Nick Corbishley 