Banking Outages Happen Because Banks ‘Can’t Keep Up With Tech’

Online banking outages are happening because banks are finding it “too hard to keep up” with fast-moving technology, an industry expert has said.

On Monday, Lloyds Bank and Halifax were hit by an issue that left customers unable to receive payments and came in the wake of a major Barclays outage that began on Friday and continued into the weekend, leaving many unable to access funds on payday.

Lloyds said its systems had returned to normal by late morning, but the incidents have been the latest in a growing number of online banking outages in recent months.

Financial technology expert Chris Skinner said the vast array of technology systems needed to operate in the modern banking world meant banks have “such a smorgasbord of things they have to work with” that the “competence of keeping up with these changes is really challenging every bank”.

He told the PA news agency that clusters of incidents were also more likely because of the shared financial IT infrastructure and close links between institutions.

Mr Skinner said it meant that situations similar to the CrowdStrike outage in 2024 – where an issue within one infrastructure firm caused a global IT outage – were now more likely in the banking sector.

“If you look at what happened in the US last year (with CrowdStrike), it was like a house of cards,” he said.

“There was a linked organisation that failed, and then other organisations failed on the back end of their failure, and I think that’s where we are today – we 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.”

Mr Skinner, who also runs the industry blog The Finanser, added that the recent flurry of outages, a number of which have occurred on Fridays and close to paydays, was likely because firms plan software updates for the weekends as it tends to be quieter, but said cybercriminal activity could also be playing a role.

“I think there’s a couple of things in the background – one is that the banks have to regularly update their systems to keep up with infrastructure providers, and when they do that, they normally would target a Friday evening, on the basis that the weekend is the quietest time for transaction and processing,” he said.

“So a Friday is probably the most likely day to have an instance where a system update causes a problem and then they have to reboot the system to get it back to where it was before the update to fix it.

“And I think the second thing is the largest banks in the world are the ones targeted the most by the criminal community in the dark web and elsewhere.

“That doesn’t necessarily happen on a payday or a Friday, but having said that, if you think about the large amount of money moving on a payday, then that’s the greatest opportunity to hijack the system.”

Mr Skinner told PA that regulators and lawmakers were also struggling to keep up with rapidly evolving 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 told PA.

“And 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.”