This story was produced by our colleagues at the BBC.
Moving homes is a stressful time — and for British mom Emily McAllister, whose daughter Keira has Down syndrome and autism, it required even more planning. But when the day came, her bank, Barclays, was unable to transfer the funds to complete the purchase. As she had already completed the sale of her former property, the pair was left without a home or access to their belongings for three days.
“We were just sort of left stood there in the clothes that we had on that we’d been doing removals in that day,” Emily said. “It was quite stressful, really.”
“My daughter is profoundly disabled. Our intention had been to get her bedroom in her new house all set up with all of the things that were familiar to her to kind of minimize the disruption.”
McAllister and her daughter spent two nights at a relative’s home and a third night in a hotel before the fault was fixed and the transfer could go ahead. McAllister said that Barclays offered her between $60 and $90 in compensation.
“It felt like a complete disregard to everything that we’ve been through,” she added.
In a statement to the BBC, Barclays apologized for the distress caused and said it would ensure no customer was left out of pocket as a result of the late January outage.
A report by British lawmakers on the Treasury Committee found that there was a combined total of 803 hours of banking IT failures at nine major institutions in the U.K. in the last two years — that’s the equivalent of 33 days of lost services. Labour politician Meg Hillier chairs the committee.
“It is software failures quite often from third parties,” she said. “This is really distressing for customers where they can’t pay a bill. It can be very scary if you’re living, particularly living from paycheck to paycheck.”
The report didn’t include data on Barclays’ January failure, but it said the bank was one of the worst affected by IT failures, meaning it could face compensation payments of $16 million due to outages since 2023.
Richard Werner, professor of economics and banking at the University of Winchester, said that the structure of the U.K.’s banks has exposed organizations to a greater risk of failures.
“When you have very concentrated large banks and the banking system really consists of five big banks, you are very vulnerable to IT problems,” he said. “And the more we become focused on digital transactions, the more vulnerable we become when systems fail.”
The British government’s Treasury department said it’s working with financial institutions to improve resilience.
“The banks have invested considerably in making their systems more secure,” said David Raw from U.K. Finance, a trade body that represents 300 financial institutions. “Clearly, even a system in which millions of pounds — billions of pounds — have been invested will always experience outages that is deeply, deeply regrettable.”
But the U.K. isn’t the only country that’s been affected. As well as recent outages in the U.S., there are reports of banks in Canada, Brazil, South Africa, Australia and Thailand experiencing recent IT failures. Chris Skinner is an author on digital banking and said he has also recognised greater numbers of faults.
“They are becoming more frequent because most of the financial infrastructure is now shared,” he said.
“It’s not operated by a single company. Historically, you might have said, ‘Well, OK, most banks relied on the few operators like Visa, MasterCard and SWIFT behind their operations. Today, they actually rely on many more operators because of the rise of fintech and the open banking, open-system structure that emerged in the last decade.”
What’s the solution for customers? “The only thing I would advise is deal with an institution that’s backed by a compensation scheme and make sure that the actual organization has a license — which means that they’re authorized by the government to act on your behalf with your money, and therefore you can get your money back,” Skinner said.
So while digital banking can make life easier, as the system gets more complex, it seems experts recognize that some disruption is inevitable — and having a plan for those situations may be the best solution.
