34.1 C
Saturday, June 3, 2023

Banking Outages and Glitches Put UK’s Digital Finance Sector Under Scrutiny

How UK’s digital finance sector faces challenges after banking disruptions, say executives

The UK’s digital finance industry is under pressure to improve its resilience and customer service after a series of banking outages and glitches that have affected millions of customers, according to executives and experts.

The recent disruptions have exposed the vulnerabilities of the sector, which relies on complex technology and third-party providers to offer online banking, payments and other financial services.

Some of the incidents include:

  • A major outage at Barclays that left customers unable to access their accounts or make payments for several hours on April 14.
  • A glitch at Revolut that caused some customers to see incorrect balances and transactions on their app on April 6.
  • A cyberattack on Starling Bank that temporarily blocked some customers from logging in or making payments on March 31.

These events have raised questions about the reliability and security of the digital finance sector, which has grown rapidly in recent years and attracted millions of customers with its convenience and innovation.

According to a report by UK Finance, a trade body, the number of customers using mobile banking apps increased by 13% to 32.6 million in 2022, while the number of customers using online banking declined by 4% to 28.5 million.

The report also found that the UK had the highest number of fintech startups in Europe, with more than 2,700 companies operating in areas such as payments, lending, wealth management and insurance.

However, the growth of the sector also comes with challenges and risks, especially as customers expect seamless and uninterrupted service from their digital providers.


“The expectations are very high. Customers want instant access, instant gratification, instant everything. And when something goes wrong, they are very vocal about it,” said Anne Boden, chief executive and founder of Starling Bank.

Boden said that Starling Bank had invested heavily in its technology and security systems to prevent and mitigate any disruptions, but admitted that no system was perfect.

“We are very proud of our uptime record, which is over 99.9%, but we are not complacent. We are always looking for ways to improve our resilience and our customer experience,” she said.

She added that Starling Bank had also been transparent and proactive in communicating with its customers during the cyberattack, which was quickly resolved.


“We have a very loyal and engaged customer base, and they appreciate our honesty and our efforts to fix any issues as soon as possible,” she said.

However, not all digital finance providers have been as effective in handling disruptions or complaints, according to some customers and regulators.

The Financial Conduct Authority (FCA), the UK’s financial watchdog, said that it had received more than 1,000 complaints about digital finance providers in 2022, up from 800 in 2021.

The FCA said that some of the common issues raised by customers included:

  • Difficulty accessing accounts or making payments due to technical problems or security checks.
  • Poor customer service or delayed responses to queries or complaints.
  • Lack of clarity or transparency about fees, charges or terms and conditions.

The FCA said that it expected all digital finance providers to comply with its rules and principles, which include treating customers fairly, providing clear and accurate information, and having adequate systems and controls to ensure operational resilience and security.

The FCA also said that it had taken enforcement action against some digital finance providers for breaching its rules or causing harm to consumers.

For example, in February 2022, the FCA fined ePayments Systems Ltd £2.5 million for failing to prevent money laundering and fraud on its platform. The FCA also imposed a restriction on ePayments’ activities in February 2020, which affected more than a million customers.

In addition, in December 2021, the FCA ordered Wirecard Card Solutions Ltd (WCSL) to stop carrying out regulated activities after its parent company Wirecard AG collapsed amid a massive accounting scandal. The FCA’s intervention affected several fintech firms that relied on WCSL to issue prepaid cards or process payments.


The FCA said that it was working closely with the digital finance sector to support innovation and competition while protecting consumers and maintaining financial stability.

“We recognise the benefits that digital finance can bring to consumers and the economy, but we also expect high standards from all firms operating in this space,” said Nikhil Rathi, chief executive of the FCA.

He added that the FCA was reviewing its regulatory framework for payments and e-money firms to ensure that it was fit for purpose and reflected the changing market dynamics and consumer preferences.

“We want to ensure that consumers have access to safe and reliable services, that firms can innovate and compete effectively, and that the UK remains a global leader in digital finance,” he said.


Some experts and industry leaders have also called for more collaboration and coordination among the digital finance providers and their partners to improve their resilience and customer service.

They have suggested that the sector could adopt common standards and best practices, share information and resources, and work together to address any issues or incidents.

For example, some fintech firms have joined forces to create industry associations or networks, such as Innovate Finance, Emerging Payments Association, and Fintech Delivery Panel, to represent their interests and promote their growth.

Others have partnered with established banks or technology companies to leverage their expertise and infrastructure, such as Monzo with NatWest, Revolut with Visa, and Starling Bank with Google Cloud.


However, some challenges and barriers remain, such as the lack of interoperability and compatibility among different systems and platforms, the complexity and fragmentation of the regulatory landscape, and the competition and rivalry among the players.

“There is a lot of potential for collaboration and cooperation in the digital finance sector, but there are also a lot of challenges and obstacles. It’s not easy to align the interests and incentives of all the stakeholders involved,” said David Brear, chief executive and co-founder of 11:FS, a consultancy firm specialising in digital finance.

He added that the sector needed to balance innovation and regulation, customer satisfaction and profitability, and growth and sustainability.

“The digital finance sector is still evolving and maturing. There is a lot of opportunity and promise, but also a lot of risk and uncertainty. The key is to learn from the mistakes and successes of others, and to adapt and improve constantly,” he said.


Support Us

Secured by Paypal

Related Stories

Check out other tags:

Most Popular Articles