Banking IT Outages – True or False?

BANKING IT OUTAGES – a story in 4 parts

Part 1:  The Banking sector suffers more IT outages than any other business sector – True or False?

We certainly hear about them when they occur, but does that mean the Banks suffer more IT outages than every other industry?  Or is it simply that they are more visible to us?

Let’s explore this by considering what happens in other industry sectors.

I’ll start with manufacturing.  A major systems incident at Jaguar Land Rover might affect their production line, their purchasing of raw materials and parts, or their ability to take orders and supply vehicles. The impact would be felt by their own staff and their dealer network. The public doesn’t typically interact directly with the manufacturer, their dealer network buffers us from any central IT catastrophe when we’re purchasing or servicing our cars. For all we know, the manufacturer could be having a serious IT outage every week, though I doubt that’s the case with Jaguar Land Rover. All in all, manufacturing sector IT incidents aren’t very newsworthy.

Like most people, I deal with the Insurance companies a couple of times each year to renew cover for my car and my home. An IT service problem might affect my ability to look up the renewal options, but I’d likely put that down to a minor issue with their website and try again the following day. It’s not a big deal, as long as I can renew before my cover runs out. If I make a claim, it will take days (if not weeks) to process – so an IT incident occurring during that process is not going to make any real difference. Any IT outage experienced by the insurance sector isn’t likely to be disruptive to our daily lives so it’s not going to make the press.

We all know how frustrating it is to be queueing for ages at the supermarket. What if their systems are down and you can’t pay for your weekly shopping? That would be frustrating, there’s no doubt about it. Worst case is that you abandon your trolley and return the following day to do it all over again, or you might go to a different supermarket chain a mile down the road. It could be a widespread problem the retailer is experiencing – an incorrect release of their store point-of-sale software, for example, rolled out to a number of branches.  However … chances are that it’s likely to be a local issue impacting one store only, and therefore a small percentage of their customers.

The large retailers typically have local systems in their stores which reduces the dependency on the central systems. If you check your bank statement, you’ll see retail transactions being posted on your statement at least a day after you’ve purchased – because the data from all stores will be gathered centrally after the trading day and a consolidated transaction file forwarded to their bank for processing the next day. Compare that with when you’ve taken money out of an ATM – it shows on your bank account almost immediately.

To conclude on the retail front – a centralised IT system issue at a retailer will not be seen by us, the general public. It might affect their supply chain or their logistics and distribution of goods, but it’s unlikely to impact the store network. In fact, the inability to purchase at the till could be as a result of an IT incident in the wider payment network (eg at VISA or Mastercard) which would be outside the retailer’s control.

Most readers will remember the British Airways incident in May, 2017. Many will remember it because it sounded so incredulous – how could one IT incident take the whole of BA down and cause such havoc? Why did it make the news headlines?

Because it impacted Joe Public. We go to airports for two primary reasons – to go on holiday or to go on a business trip. We arrive by public transport, or by taxi, or possibly by hire car. If we go by car, we may have left our car at an offsite parking facility. Once we’re in Departures and everything is grounded, we’re stuck. It’s almost impossible to turn back. Information is limited, often rather chaotic. There’s a steady flow of passengers entering the airport and the crowds are growing.

People are anxious about whether they will make their business meetings. Holiday-makers who arrived in a feel-good mood are very quickly becoming frustrated and unhappy. The disruption goes beyond the boundaries of the airport, the incident affects incoming flights and causes grief for those stranded in airports abroad. How and when will they get back home?

I doubt British Airways have many serious IT incidents, but I’m sure you can see why the press had a field day with it.

So – what about Banking? The first thing to say is that the finance industry is very heavily dependent on IT. Similar to Insurance, Banking is a service industry but it is more immediate and plays a much bigger part in our daily lives. Remember my comment about taking money out of an ATM above? What if you do that on Sunday lunchtime at an ATM in Hong Kong? You still expect it to go to your current account immediately. That would be 4am on Sunday morning here in the UK, an example which illustrates why the 24 by 7 demand is far greater in Banking than in the majority of the other industries referenced above (with the possible exception of the airlines).

When Banks experience a serious IT incident it inevitably impacts the public – preventing us from paying bills, buying our shopping, checking our balance online, getting money out of an ATM, and the list goes on. If it were to happen at the end of the month it could also delay companies paying salaries, which brings additional headaches – “have I got enough in the account to cover my mortgage payment?” “Am I going to go overdrawn?”

Then there’s the fear, uncertainty, and doubt. Is the IT incident a Cyber attack? Has someone got access to my money? My account? My credit card details? Suddenly it takes a dark turn. If you can’t log on and see your account information … how long does it take before mild panic sets in and people get on social media to vent their anger? Not very long at all.

The fact is – an IT outage in the Finance industry hits lots of people, hits them immediately, and triggers a much greater “is my money safe and secure” emotional response.

And that makes juicy news headlines.

In conclusion, I don’t see any proof that the banking industry suffers more IT outages than other industries. When they do happen, they cause a stronger emotional trigger and a widespread reaction that we don’t see in other industry sectors. That’s what gets Banking outages in the news media.

In Part 2 I’ll be writing about the “legacy systems” and “ageing technology” comments we regularly see in the press.

 

Brian Lancaster, BLMS  (specialists in interim IT Management and Leadership)

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