Barclays bak could pay out up to £12.5 million in compensation to customers affected by technology outages over the last two years, it has revealed. There has been more than 33 days’ worth of unplanned tech and system outages in the last two years for nine of the UK’s biggest banks and building societies, according to new data published by the Treasury Committee.
A group of MPs on the committee asked bosses of the banks to reveal the scale of recent IT failures and compensation payouts, after an outage led to days of disruption for Barclays customers last month. Barclays confirmed that, during that incident, more than half of attempts to make an online payment failed.
The bank estimated that it expects to pay out between £5 million to £7.5 million in compensation for the specific outage, adding to an estimated £5 million for incidents between January 2023 and January 2025.
Last month, Nationwide, First Direct, Lloyds and Halifax all confirmed issues with their online banking systems leaving many customers without access to funds on payday. It was the second month in a row that major banks were hit by IT issues around payday, with experts saying online banking systems often struggle with the high rate of activity as wages and bills go in and out of accounts at the end of each month.
At the end of January and in early February, Barclays, Lloyds Bank and Halifax were all hit by service outages which left customers unable to access funds on or just after payday. Fintech expert Chris Skinner told the PA news agency in the wake of those outages that banks were finding it “too hard to keep up” with fast-moving technology.
“I think the world is spinning so fast with technology that the challenge we have is no-one’s keeping up, particularly regulators and lawmakers,” he said. “So the regulators and lawmakers need to have people who do better due diligence.
“I think there’s an issue here with reliability, service and resilience, and that’s the accountability of the people who are organising the structures, both from within the business, and those who look over the business in terms of the regulators. At the moment, I think both are probably finding it too hard to keep up.”
He added the vast array of modern tech systems needed to operate in the banking world today mean firms have “such a smorgasbord of things they have to work with”, the “competence of keeping up with these changes is really challenging every bank”.
Mr Skinner, who also runs industry blog The Finanser, said the flurry of outages on Fridays – and sometimes close to paydays – is likely due to banks planning software updates for weekends as it tends to be a quieter time to carry out such work.