IT outages: Are UK banks failing to modernise?
Imagine it’s payday, and you’re trying to pay your bills or make a critical purchase, only to discover that your bank’s system has gone down.
For millions of customers at Britain’s major banks, this nightmare is all too familiar.
Over the past two years, nine of the UK’s banks were offline for more than 800 hours, disrupting millions of customers access to their funds.
Despite UK banks reporting record profits, with £40.3bn in 2024 alone, the sector has suffered from perpetual system failures, raising questions on whether legacy banks have been failing to modernise.
Meanwhile, younger digital banks like Monzo and Revolut have positioned themselves as resilient alternatives, promising a more reliable user experience.
Why are bank outages happening?
What’s more, the problem showed no signs of slowing down.
At the beginning of 2025, two high-profile incidents further exposed the weaknesses in the system.
Barclays first suffered a major outage in January that disrupted payments at the tail end of the month, Just one month later, all Lloyds Banking Group apps went dark on payday, preventing its customers from accessing their funds.
Industry experts have cited several drivers behind these failures, including outdated legacy technology, third party provider failures and internal software errors.
These technical weaknesses have become a persistent weakness within the sector’s heavyweights, with no clear resolve in sight.
The human cost of outages
For customers, bank outages have caused more than just frustration. In some cases, they have had critical consequences, leaving businesses unable to pay employees or suppliers.
Small and medium sized businesses (SMEs), in particular, have been hit the hardest.
Laurent Descout, chief executive of fintech firm Neo, highlighted the impact on small businesses.
He said: “Unlike large corporations, SMEs lack the financial cushion to absorb these shocks. A failed payment can mean serious disruption, delayed supplier payments, or even missing payroll”.
Customers of traditional banks also expressed frustration with the way they were treated during, and following an outage.
Many reported feeling neglected by banks, which often prioritised larger corporate clients during crises, while smaller customers waited for updates.
Do fintechs have a better approach?
While traditional banks continue to experience IT failures, digital-only banks like Monzo have built a reputation of tech-driven reliability.
Monzo’s chief technology officer, Matej Pfajfar, told City PM: “These types of payment outages, at that scale, are well below the level of service that the industry should be providing, and that customers rightly expect.”
“Technology is in our DNA and we’ve designed our systems from the ground up to ensure we are always available to our customers,” Pfajfar added.
He explained the steps Monzo has taken to prevent these harmful outages, like choosing to not schedule downtime for maintenance.
Instead, the payment provider continuously updates its systems without interrupting customer access.
The bank’s approach includes a standby platform that runs on a separate cloud provider, allowing it to quickly switch systems in the event of a failure.
This approach was put to the test on 24 August 2024, when Monzo transitioned to its backup platform within minutes, avoiding service disruption for customers.
“We’ve designed and built our systems in-house to be scalable, resilient and secure”, said Pfajfar.
“Our systems are designed to be resilient to faults in any component”, he added. “If there is an issue with one part of the system, the rest of the infrastructure seamlessly picks up the workload. It’s fault tolerant”.
Experts call for modernisation
While past outages eroded public trust, traditional banks faced a clear choice to either modernise, or fall behind.
Industry experts have called on the banking sector to prioritise investment in modern payment technology, citing AI-driven automation, cloud based infrastructure and monitoring as critical in eliminating these issues.
Tom Hewson, chief executive of RedCompass Labs, argued that banks needed to prioritise investment in modern payment technology.
He said: “Fixing this problem isn’t easy. Banks are expected to deliver flawless, resilient and mostly free services while also modernising.”
“But with increasing regulatory scrutiny, frustrated customers, and millions in compensation payouts, the message is clear: business as usual isn’t an option”.
The cost of failing to modernise is steep. As Robert Kraal, founder of Silverflow, warned: “The sheer number of complaints shows this is a systemic issue; not an isolated incident. The time for incremental fixes is over; banks need a fundamental shift towards core technology modernisation”.