Barclays’ IT Outages: A Growing Concern for Customers and Banks Alike

Introduction: The Impact of Barclays’ IT Outages

In recent months, Barclays has faced significant challenges with its IT systems, leading to widespread disruptions for its customers. The bank has acknowledged that it expects to pay millions of pounds in compensation for the inconvenience caused by these outages. A particularly severe incident occurred last month during payday, when a technical glitch caused 56% of online payments to fail, leaving many customers unable to access essential banking services. This outage, which lasted several days, was attributed to "severe degradation" in the performance of Barclays’ mainframe computer—a critical system used for bulk data processing. The Treasury Committee of MPs has revealed that the bank anticipates paying between £5 million and £7.5 million in compensation to affected customers for the distress and inconvenience caused by this incident alone.

What’s Behind the IT Failures?

The root cause of the Barclays outage has been identified as a problem with the bank’s mainframe computer, which is a large-scale system used by many organizations for handling massive amounts of data. While this particular incident was resolved, it raises questions about the reliability of these legacy systems, which are often decades old. Barclays is not alone in facing these challenges; other major banks, such as NatWest and HSBC, have also experienced significant IT failures in recent years. NatWest, for instance, logged 194 hours of unplanned outages, while HSBC experienced 176 hours of disruption. These outages are not just minor inconveniences; they can have serious repercussions for customers who rely on banking services for everyday transactions.

The Financial Toll of IT Failures

The financial impact of these outages is significant, both for customers and for the banks themselves. Barclays’ compensation payout for the latest incident is expected to be one of the largest in recent years, with the bank potentially paying up to £12.5 million when all outages from January 2023 to February 2025 are taken into account. This figure far exceeds the £350,000 paid by the Bank of Ireland, which was the second-highest payout in the same period. The Treasury Committee has expressed concern over the frequency and severity of these outages, which suggest a systemic issue within the banking industry. Customers who were unable to access their funds during the payday outage were left in a vulnerable position, many of whom may have faced additional financial hardships as a result.

Why Do These Outages Keep Happening?

The recurring nature of these IT failures has led to questions about the underlying causes. Banks have identified several common factors contributing to these outages, including problems with third-party suppliers, disruptions caused by system changes, and internal software malfunctions. These issues highlight the complexity and fragility of the IT infrastructure that underpins modern banking. The Treasury Committee has been investigating these problems and has requested data from banks to better understand the scale and impact of these failures. The committee’s inquiries have revealed that the nine top banks in the UK experienced a total of 803 hours of unplanned outages over the past two years, equivalent to 33 days of downtime. This staggering figure is made up of 158 individual IT failures, though it does not include the recent Barclays incident.

The Bigger Picture: Accountability and Systemic Change

The frequency and severity of these outages have raised concerns about the accountability of banks and the need for systemic change. The Treasury Committee has expressed frustration over the lack of transparency and the inconsistent quality of data provided by banks regarding their IT failures. This lack of accountability makes it difficult to assess the true extent of the problem and to hold banks to account for the impact on their customers. The committee has called for greater transparency and more robust reporting mechanisms to ensure that customers are protected and that banks are held accountable for their failings.

Conclusion: The Need for Change

The ongoing IT outages at Barclays and other major banks are a clear indication that the industry needs to take urgent action to address these issues. Customers deserve reliable and secure banking services, and it is the responsibility of banks to ensure that their IT systems are up to the task. While compensation payments are a step in the right direction, they do not solve the underlying problems that lead to these outages. To prevent future failures, banks must invest in modernizing their IT infrastructure, improving their resilience to disruptions, and enhancing their ability to communicate openly and honestly with their customers. Only by taking these steps can they restore public trust and ensure that such incidents become a rarity rather than a regular occurrence.