The beauty of online banking is that it’s – for the most part – instant. If your friend owes you money, they can transfer it to your account immediately. If you forgot to pay your bills, log online and you can pay them right then and there. Even on payday,
the money should go directly to your account. However, payments outages have become more and more frequent – so what’s the deal and where are the solutions?
A short history
As digitisation in banking industry has accelerated rapidly, it is obvious that this transition would not be without any hurdles. Throughout the last few years, banks and payments platforms have inevitably glitched, causing payments to be frozen and online
banking to be inaccessible.
In 2018, the
UK Faster payments system failed on a Sunday, leading to two days worth of delayed payments for multiple big banks. In 2019, consumers of Lloyds Banking Group were impacted by a
Faster Payments error that halted online banking and caused issues withdrawing cash from ATMs.
Major incumbents are not the only culprits, In August 2024, digital-only bank
Monzo suffered a technical payments issue on their mobile banking app, but were able to solve the problem within a few hours.
In September 2024, there were
over 600 reports cof Lloyds Bank having issues with transactions, and
Santander UK app had a three hour outage in which customers were unable to access their accounts.
This year alone, there have been multiple serious payments outages across the UK:
Of course, these major payments failures are not limited to UK banks. In 2022,
Interac, a Canadian e-transfer service, was down to due an issue with Rogers which caused a nationwide payments error. In Singapore, DBS bank has suffered multiple payments failures on their digital platforms – causing a
two day outage in 2021, and
another in 2022.
Most notoriously, the
CrowdStrike software update during the summer of 2024 caused a global tech outage across Microsoft platforms impacted people worldwide – freezing payments for banks, transactions to retailers, stalling airports, news services, and more.
Why are these outages happening?
There are multiple reasons for these fiascos – most have been attributed to IT errors, software updates, and power failures.
Scott Dawson, CEO of end-to-end payments platform DECTA, pointed to the lack of standard resilience across banks as a reason for the failure: “The recurring nature of these banking app outages, particularly on payday, highlights a critical lack of resilience
in our financial infrastructure. Resilience stopped being a buzzword a long time ago – which is a shame because today it’s one of the most important aspects of modern business, especially when a company is handling money. The sheer volume of affected users,
exceeding 4,000 for Lloyds alone, underscores the systemic risk. A big part of why so many business leaders grumbled that resilience was another empty phrase was that there was no real standard to measure resilience.”
Nowadays, where more and more people bank online and use cash sparingly (if they use it at all) not having access to their money for a day or even a few hours can be critical and cause legitimate hardship. I wrote an article last week highlighting how
cash still has a place in the banking industry.
Dawson added: “Beyond mere inconvenience, these failures disrupt essential payments, impacting livelihoods and business operations. The inability to pay staff or purchase necessities creates genuine hardship. The fact that this follows a similar Barclays
mobile outage in January signals a persistent issue, not isolated incidents.”
Natural disasters, power outages, and technical glitches are reasons why the entire banking system should not be digital. Until financial systems are able to withstand the amount of digital transactions that take place on days such as payday, there should
be alternative options for those who need to have access to their money at all times.
Robert Kraal, co-founder and CBDO at Silverflow, commented: "The fintech and banking world are in desperate need of a drastic update – this is a systemic crisis that directly impacts people's livelihoods. The fact that these outages occurred on payday, preventing
individuals from accessing essential funds, paying bills, and even paying staff, highlights the real-world consequences of outdated technology. The echoes of the Barclays outage in January, also on payday, further demonstrates this is a recurring and escalating
issue, not an isolated incident.”
What are the solutions?
As a result of the multiple outages, the
UK Treasury Committee has written to CEOs of nine financial institutions to assess the IT failures that have impacted the payments system over the two years. This is the first step for the government to end these errors.
Dawson stated: “The Treasury Committee's intervention is timely, but we need proactive industry-wide solutions to ensure resilience and restore public trust. This isn't just about apps; it's about the reliability of our financial ecosystem.
“This is why the introduction of the EU’s Digital Operational Resilience Act (DORA) is so important in establishing regulatory technical standards – one yardstick to measure resilience across every company.”
The
DORA regulation came into effect this year, and it could be the solution for the future of cybersecurity and digital banking – safeguarding consumers from payments failures moving forward.
Kraal concluded: “For both traditional banks and fintechs, long-term success hinges on a fundamental shift towards core technology modernisation. Investing in scalable, API-first systems, enhanced security, and AI-driven solutions for fraud detection and
customer experiences is not a luxury, but a necessity. Building a robust, resilient infrastructure now will not only capitalise on the current boom but also provide a crucial buffer against inevitable downturns. The time for incremental fixes is over; a comprehensive,
strategic reinvestment in core payments technology is essential to restore customer trust and ensure operational efficiency."