It’s become something of a routine. IT services at a bank go down, the bank’s Twitter account is bombarded with complaints, politicians seek answers, and the bank apologises. All the while, customers are left stranded, unable to access their money and facing delays in paying bills.
Since becoming Chair of the Treasury Committee 16 months ago, the number of IT failures that have occurred at banks and other financial services institutions is astonishing. There have been problems at Equifax, TSB, Visa, Barclays, Cashplus and RBS, to name a few.
With bank branches closing and customers being ushered towards online services, the availability of those services is vital. Yet we continue to see firms failing to provide their customers with the level of service they expect; TSB’s IT meltdown earlier this year being a prime example.
The Treasury Committee was inundated with complaints from TSB customers who were growing increasingly frustrated with the bank’s poor service, as well as its lack of communication with customers.
Many people were unable to access their TSB account via its website or app, so resorted to phoning the bank. Soon enough, TSB’s phone lines buckled. The final resort for many customers was to trudge down to their local TSB branch, only to find that they were hamstrung by the same technological glitches.
The whole saga shows the importance of a bank’s IT infrastructure, and the far-reaching consequences when things go wrong.
As if losing access to your bank account isn’t bad enough, the situation can often be compounded by the fact that these incidents provide prime opportunities for fraudsters to pounce. TSB was no exception, with thousands of customers suffering fraud attempts.
The Treasury Committee hauled TSB’s bosses in to Parliament to find out what went wrong and what was being done to put it right. The Committee hopes that its robust approach demonstrated to other firms that IT failures will not be taken lightly.
We are now seeking to take a more wholistic look at the issue, rather than scrutinising each incident in isolation. Firms should be in no doubt, however, that the Committee will continue to seek answers if their customers are hit by serious disruptions.
Millions of people have been affected by the uncertainty and disruption caused by failures of banking IT systems. And when people are struggling to access their cash, measly apologies and hollow words from financial services firms do not suffice.
We know from experience that the real-world consequences of these incidents can be desperately sad. There were reports of TSB customers left unable to purchase food, facing eye-wateringly high charges for unpaid bills, and even considering cancelling their wedding. But TSB is not the only firm in the financial services sector to suffer IT problems.
In June, there were sudden and severe consequences when Visa went down. A third of all spending in the UK is processed by Visa, so when such a vital part of the country’s payment infrastructure failed so catastrophically, chaos was reported in shops as many consumers and businesses were unable to make or accept payments.
More recently, customers of both NatWest and Barclays were unable to access their online banking over the same 24-hour period. The previous day, Cashplus suffered serious problems.
There’s little doubt that the next IT failure at a financial services company is just around the corner, which is especially concerning in the run up to Christmas.
So today, the Treasury Committee has launched an inquiry into IT failures in the financial services sector. We’ll examine the ability of financial services institutions such as banks to guard against service disruptions and to put things right in the event that disruptions do occur.
We’ll also look at the common causes of disruptions, the ways in which consumers lose out, and whether regulators have the relevant skills to adequately hold people to account.
Many high street banks justify the closure of their branch networks on the basis that they are providing a seamless online and mobile phone banking services. These justifications carry little weight if their banking apps and website cannot be relied upon.
The Committee will take evidence from banks, regulators, the Government and others, and will appoint a specialist advisor. We’ll seek to get to the bottom of why these IT failures continue to occur, and what should be done to prevent them.
Nicky Morgan is the Conservative MP for Loughborough and chair of the Treasury Select Committee