UK banks suffer month of IT failures; Barclays to pay millions in compensation

The report excludes recent outages like the Barclays disruption from January 31 to February 2, 2025, where 56% of online payments failed due to a significant decline in the bank's processing performance during the three-day period

An investigation into the frequency and causes of banking IT failures has raised serious concerns about the reliability of the UK's financial institutions. According to data from the cross-party committee, the 158 IT failures recorded between January 2023 and February 2025 affected millions of customers and caused significant disruptions in accessing essential banking services.

These incidents, which span across some of the UK’s largest banks including Barclays, HSBC, Lloyds, Santander, NatWest, and others, highlight the challenges faced by the financial sector in maintaining consistent service levels.

Notably, the report does not include some of the most recent outages, such as those experienced by Barclays customers between January 31 and February 2, 2025. This three-day disruption led to 56% of online payments failing due to a severe decline in the bank’s processing performance.

Barclays has committed to compensating affected customers, estimating the payout could range from £5 million to £7.5 million, with the total amount possibly reaching £12.5 million when factoring in earlier compensation claims. In comparison, the Bank of Ireland has paid out £350,000 for similar outages.

Chorus for stronger banking tech grows louder  

Dame Meg Hillier MP, Chair of the Treasury Select Committee, has expressed grave concerns about the impact of these IT failures, particularly for individuals who rely on timely access to their banking services. "Losing access to banking services on payday can be a terrifying experience, even if the issue is resolved quickly," Hillier said. "This is why it's so important for banks to not only address the issue quickly but also ensure customers are informed throughout."

The data from the committee shows that a significant proportion of the failures were caused by problems with third-party suppliers, internal software malfunctions, and issues arising from system changes. Hillier emphasized that the large number of outages, which collectively equate to a month’s worth of banking disruptions over just two years, underscores the widespread nature of the problem.

In response to these findings, Hillier reiterated the need for financial institutions to invest in better systems, have contingency plans in place, and maintain open lines of communication with customers. As the investigation continues, it is clear that improving the resilience of banking IT systems will be crucial to restoring consumer trust in these services.

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