The regular IT and security failures at British banks make it a longshot to become a cashless society any time soon.
British banks experience 1.2 IT or security failure each day, according a comprehensive analysis by consumer group, Which? The glitches prevent customers from making payments.
During the last nine months of 2018, the consumer group found that 302 IT and security incidents at banks prevented customers from making payments. This is the most thoughtful review of these issues, since the Financial Conduct Authority (FCA) mandated in April 2018 that banks report any major operational or security problem that prevented customers from using their services.
What the Analysis Shows
Six of the UK’s largest banks experienced one failure every two weeks, according to Which. One of those banks was HSBC whose system shut down on the very day that the treasury select committee officially began inquiring about IT failures at banks.
At 41, Barclays led the pack with the largest number of failures, according to the consumer group. The other banks had the following number of failures:
- Lloyds: 37
- Bank of Scotland/Halifax: 31
- Natwest: 26
Though TBS caused a nightmare last year when the unrolling of its new IT system caused 1.9 million customers to lose access to their online banking services, the bank only experienced 16 incidents.
What These Outages Mean
The analysis shows that the failures occur much more often than people had expected. The group also pointed out that these outages not only cause major inconvenience and stress for consumers, but it proves that British banks are currently not strong enough to be part of a cashless society.
Which believes a regulator should be in place, so that customers still have cash as an alternative when online banking systems fail. It ensures that no one is left out of payments. The consumer group has asked that the government appoint a regulator who would take full responsibility for the cash system as a way to ensure that customers always have access to cash.
When things go wrong, UK Finance, which represents the banks, stated that it works to try and minimize any disruptions to customers. The agency promises to continue to make sure systems are strong and safe, and to continue its work with the UK’s financial system, institutions and customers.
The Real Problem and How to Solve It
The IT and security failures at banks are visible blind spots. Banks know about them, but they look at them as secondary concerns to more pressing issues, credit risk and compliance.
Those are equally important, which means that cyber security risk also needs to be addressed effectively. Those banks considered the most secure have boosted their ability to detect and respond to attacks, but what they really need to is re-strategize.
The best way to combat IT and security failures is to create a new operating model, a smart investment in talent, an investment in new technologies, and changed attitude about security among the entire organization.
It’s definitely a lofty task, but one that is worthwhile. The result is a secure banking system that is inching closer to a cashless society.
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