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Tuesday, 25 November 2014


RBS Customers Locked out Of Their Bank Accounts Again, 
Just in time for Christmas!

You may not have noticed yet, but it’s nearly Christmas. There are just a few days to go before Black Friday, the most important day of the year for retailers. The shops are jam-packed with festive goodies, decorations and toys, and customers are on the starting blocks to get all their shopping done in time for the big day.  This year the must-have accessory for the under-12s is the Frozen doll - Anna, Elsa, Kristoff, or Olaf – from the 2013 Disney movie that has become the highest-grossing animated film of all time. I for one am beginning to panic a bit, as I haven’t even ordered the turkey yet, never mind sorted out any gifts.

The characters from Frozen
Even if you are much better-organised than I am,  if you live in the UK, last Friday morning you may have struggled in vain to buy anything at all from your Christmas present list.  Customers of the Royal Bank of Scotland, Ulster Bank and NatWest found they were temporarily unable to make cash point withdrawals or debit and credit card payments for a short period on the morning of Friday November 21.

This was yet another bitterly embarrassing systems failure for the RBS banking group, made even worse by occurring JUST ONE DAY AFTER it received record-breaking fines totalling £56 million from British financial regulators.   The Financial Conduct Authority (FCA ) fined the bank £42 million, and the Prudential Regulation Authority (PRA) fined them an additional £14 million, after a joint investigation into IT failures dating back to June 2012, when as many as 6.5 million customers were frozen out of their accounts for several weeks. 

After the fiasco of 2012 RBS continued to experience severe IT problems, including having its services disrupted on the biggest shopping day of the year in 2013.  A spokesperson for the bank was quick to point out that this latest incident was just a glitch, lasted no more than 90 minutes, and was put right very quickly.  It happened between 7.45am and 9.15am and mainly affected customers trying to make large transactions or payments abroad. 

Need Christmas spending money? Too bad!
Hmm, a nifty piece of PR perhaps, but that still sounds pretty serious to me, and it must have been beyond embarrassing for the bank, especially for Chief Administration Officer Simon McNamara, who, in response to the announcement of the fines on Thursday, optimistically declared
I can pretty much guarantee that incident will not happen again because of the actions we've taken.

Famous last words, Mr. McNamara! To be fair though, he has been doing his best. The 2012 failure was the result of decades of under-investment in technology at RBS, and since then it has ploughed hundreds of millions of pounds into IT systems designed to minimize risk of failure.

It’s not just RBS who are at fault. Andy Haldane, Director for Financial Stability at the Bank of England, told lawmakers last year that all the banks needed to transform their IT because they had not invested enough during the boom years. Mr. Haldane said 70-80 percent of big banks' IT spending was on maintaining legacy systems rather than investing in improvements. 

To put it in layman's terms, our banks are still relying on old and creaking computer systems  created decades ago. These systems were written in arcane computer languages fully understood only by the IT specialists who wrote them, and who have long since moved on, retired or died, leaving very little in the way of maintenance instructions for the hapless IT staff who followed them.  All of the programs have been patched up and amended hundreds of times since they were originally commissioned. 

Surely the time is ripe for a major overhaul and re-development of those ancient systems. Out with the old and in with new, or,in the words of Elsa from frozen:-
 Let it go!
It's time to see what I can do
To test the limits and break through
Let the storm rage on.

            Let it go!


  1. Fascinating. I ran into a guy recently who told me it should never be necessary to use a card at an ATM. He said all that's needed is an 8-digit code from a sending bank and an 8-digit code from the receiving bank. Put the two together and one ought to be able to extract the funds. True?

  2. Hi Mr Harrison, what an interesting question!

    I had not heard of this idea before but a bit of research yielded some results that indicate a number of banks are currently trying to develop similar systems. Technically I think it is possible, though from a business point of view I can think of all sorts of snags.

    For example, there would need to be a lot of co-operation between the banks and a lot of IT development work, which does not come cheap.

    I really like the idea of setting up an easy-to-use method of conducting international fund transfers, especially for small domestic users or even the 'unbanked'.

    Thanks for visiting the blog and for the comment.