Bank IT ‘not fit for purpose’, MPs claim

Banks should spend growing profits on upgrading IT systems, according to Northern Ireland Affairs select committee

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Bank IT systems have been labelled 'unfit for purpose' by the Northern Ireland Affairs select committee, following a series of outages which have had an impact on customers.

A report published by MPs highlights a recurrence of technology failures following a major 2012 outage at Royal Bank of Scotland-owned Ulster bank, which resulted in millions of customers being unable to access funds for weeks in some cases.  

The select committee said that, as banks return to profitability following the financial crisis, money should be reinvested in enhancing the reliability of technology infrastructure to improve customer service.

“It is clear that banks' IT systems are not fit for purpose, and this has led to the totally unacceptable situation of some customers being unable to access their accounts, or experiencing other problems, since 2012,” the report states.

“With a turnaround in the situations of all Northern Ireland's banks, whereby they have now returned to profit, we believe that some of those profits should be used to update their IT systems, thereby benefitting their customers.”

The report cites comments made last year by the Prudential Regulation Authority’s director for UK banks, Sam Woods, who suggested that UK and Northern Ireland banks are a long way from making “antiquated” IT systems more robust.

Woods said that the PRA investigation into the resilience of major UK banks’ IT systems had uncovered a “number of deficiencies”, with many struggling to improve “antiquated” IT systems.

“Despite our progress, I feel that we are a very long way from being able to sit here with confidence and say UK and Northern Ireland systems are robust,” said Woods.

Ulster Bank was the worst affected by RBS’ 2012 outage, caused by a failed update of CA7 batch processing software, with its customers continuing to experience problems weeks after other parts of the bank had resumed normal service. Its reliance on its parent company’s infrastructure as a result of an ongoing outsourcing deal was later criticised in a £2.75 million regulatory penalty by the Central Bank of Ireland.

Although RBS has since made remediation efforts – such as splitting batch processing systems to avoid a repeat of the outage – but has drawn criticism for subsequent outages, with customers unable to access funds or make payments in December 2013.

The select committee report also demands that a regulatory investigation into the causes of the 2012 outage be made public.

“The public were badly let down by Ulster Bank, and we believe, therefore, that either Ulster Bank, or the FCA, should publish its report into the Bank's "IT glitch" without any further delay,” it says.

Image: iStock/Matto353

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