Could The UK Be Faced With yet Another Banking IT Crisis?
In 2012, the RBS Group was hit by a banking disaster due to computer system problems. Could similar complex business codes cause further disruptions?
The 2012 banking IT failure
The RBS Group, which includes the banks NatWest, Ulster Bank, Coutts, and Royal Bank of Scotland, computer systems became severely corrupted after a routine computer update.
The corruptions, which happened in mid-June in 2012, affected the computer systems ability to process payments/ direct debits, withdraw cash, view bank details, and various other banking transactions.
The system failure affected many customers, some of which faced fines for late payments. Some customers had to wait to regain normal access to their accounts until mid-July. In an attempt to assist clients who were affected many branches extended their opening times.
RBS faced a fine of £56 million for the incident in 2014.
Could another event like this happen again?
Banking computer systems are extremely complex and are often ancient.
In the UK the mission critical banking systems have between 800,000 to 900,000 lines of code; this is considerably more than the standard mission critical banking system which only has roughly 6000,000 lines of code.
The bigger and more complex a system is the harder it is to maintain and the likely hood for glitches and corruptions increases. The average UK bank will experience 20 to 30 computer incidents a month.
Keeping in Lieu all that is going on, many foresee another major IT event in progress i.e. near future
Can another incident be prevented?
Avoiding another event like the RBS Group crisis is possible. However, this would not be an easy process, and it would involve banks replacing their core systems with new ones.
It may sound like a straightforward task. However, it is more complicated and time-consuming than it sounds. There is also the risk of issues along the way which could range from slight teething problems to major system breaking problems. Replacing an old system for a new system could potentially cause more disruption than it solves.
The problem with banking computer systems is mainly down to the software. The software most commonly used in banks is ancient, and most of the original designers of the software are no longer available. Due to the old feature of the software, it leads to a knowledge gap as many software engineers do not have in-depth knowledge about the systems they use.
The banks will be forced to update their systems eventually. Banking systems are under increased strain, and the cracks are already beginning to appear.
It is extremely likely that banks will be forced to update their systems over the course of many years to minimize disruption. In the meantime, consumers should be vigilant when it comes to their accounts.
It is always good practice to regularly check your bank account. Make a note of the amount you have in your account, details of regular payments, keep an eye out for suspicious activity.
The more you know about your account, the more prepared you will be if you are unfortunate to face problems, whether they will be the next banking crisis or theft/ fraud.