Glitches in banks IT systems have been failing customers and diminishing confidence. Last week, NatWest had a huge IT problem, in which software didn’t update correctly. Customers could not access bank accounts at all, reports ZDNet UK.
A week after the incident, analysts are saying a meltdown in bank IT services has been inevitable. Banks are cutting costs that mainly come from IT budgets and have no modernised software as it should be.
Digital bank systems are at a risk of failure without a substantial budget to care for new software updates and IT staff. The problem with IT care is that issues are never seen in advance, without proper care glitches will down entire systems and banks are unprepared.
“In some of the banks the cost-cutting pressure is quite big — there are targets to meet,” said Freeform Dynamics analyst Martha Bennett to ZDNet UK. “I have spoken with existing and former IT people in some of the larger banks who are saying they are just waiting for a disaster to happen. It’s easy to cut corners when you don’t see an immediate effect.”
With the bank economy not in the best shape, many banks have had to cut or combine teams and offices. Staff has been cut, more on the IT side than other departments. Employees are even teaming up worldwide for banks, Bennett said.
“I know of some cases of doubling the number of servers someone has got to administer, combing two back-office IT departments into one, without necessarily doing a proper assessment of whether the skills are actually the same when you combine these two things together,” she said.
Bennett said Royal Bank of Scotland has been part of the back-office consolidation, but there are other banks that are guilty of the same practice. RBS has not yet announced the cause of the glitch in its systems but sources have speculated the cause may be outsourcing or offshoring. Having teams worldwide can lead to confusion in a meltdown.
Other issues in the UK banking system have to do with legacy. UK banks are being pressured to modernise and use online banking and mobile apps. The problem is moving the systems over, according to Chris Skinner, a banking technology strategist.
“(Banks) are stuck in a Catch-22,” Skinner said to ZDNet UK. “They’ve got systems that are very old, but they haven’t replaced them — they are highly concerned about the risk and exposure to failure. The longer legacy systems exist, the more likely they are to cause problems, by not being able to keep pace with things like mobile payments. “
There are still banks operating at the back-end in pounds, shillings and pence, Skinner said. If a legacy system isn’t causing problems, banks see no need in changing it.
Typically banks will have disaster back up plans when changing systems so customers do not know it even changed. Merging banks have also caused system problems in the past. While issues continue to happen with many branches, all banks have denied computer systems or IT problems were to blame.
As of Friday, hundreds of NatWest and RBS branches will be open extended hours to serve customers and fix banking issues, according to the Guardian.