A new survey delving into technical failures within the financial services industry, and consumer attitudes towards them, has revealed a growing number of UK consumers have been hit by a technology failure in the banking sector over the last 12 months. Industry figures should consider their responses to this carefully, with one-in-three of customers also saying this would lead them to consider switching banks.
Technology outages are having an increasingly intense impact on the global economy, as business processes continue to digitise across all industries. According to a global report from Oxford Economics and Splunk, every year downtime costs the world’s largest companies a colossal $400 billion. The most substantial portion of that comes from lost revenue – with the Global 2,000 forfeiting an average $49 million on that front alone. But other costs quickly add up too – including a $22 million average bill from regulatory fines, $16 million in SLA penalties, and $15 million in settling legal costs.
If the banking sector is to continue enjoying its new-found profitability, it will need to take this cost seriously according to a new report. Commissioned by consulting firm Roq, a OnePoll survey of 1,000 UK adults has found that over the last year in the banking sector, a third of people in Britain have been affected by a technology glitch or failure, such as a service outage, app unavailability, data breach or loss, transaction malfunctions or payment failures or delays
Source: OnePoll survey, commissioned by Roq, of 1,000 UK adults
This situation might even deepen if the events of the CrowdStrike fiasco are to repeat. Then, four leading banks were forced to apologise to customers after reports of issues with digital banking services, on a day when many were due to receive their wages. But for a number of customers, those kind words may have been too little, too late.
Roq’s survey also found that 30% of consumers are either very likely or fairly likely to leave their bank as a result of a technology glitch. In an industry where governance, regulation and security are the critical foundations of success, these statistics are “a real cause for concern” according to Paul Darby, delivery lead at Roq.
Darby explained, “There are growing numbers of technical challenges that could seriously undermine the success of this industry-wide transformation. And with consumers now expecting nothing short of perfection when it comes to their online banking experiences, banks and financial institutions must respond with urgency. Those that have understood their client needs and thus appropriately tested their solutions, will retain loyalty with their clients and avoid damaging circumstances such as those recently seen.”
According to Roq’s findings, this may also be a matter of future-proofing a bank’s ability to attract customers. Older customers had broadly not been impacted by glitches as they were less engaged with digital banking products. Three-quarters of 55-64 year olds and the same number for the 65 and over age group stated they’d not been affected at all. But among the future majority demographics of the customer base, 19% of 18-24 year olds and 17% of 25-34 year olds admitted to being hit by a technical failure in the past three months.
Worryingly, the same two younger age groups were most likely to switch banks if they were affected by a technology failure. A 57% majority of 25-34 year olds and 47% of 18-24 year olds said they were either very likely or fairly likely to leave the bank where a failure had impacted them. So while the older generation seemed more likely to sit on the fence – with 48% of both 45-54 year olds and 65 and overs stating they are neither likely nor unlikely to leave their bank – companies cannot count on this level of loyalty for much longer.
Source: OnePoll survey, commissioned by Roq, of 1,000 UK adults
Darby noted, “It’s clear that customer expectations are high when it comes to digital experiences, especially amongst the digitally-savvy and evidently more unforgiving younger generation. Banks and financial institutions cannot rest on their laurels; they must ensure they have robust systems and risk mitigation procedures in place to avoid technical failures that could push their customers to competitors.”
There was also a regional difference at play. London residents have been most affected by technical failures in their banking services in the past year, with 59% admitting to being hit by a glitch. This is compared to the least affected place, the North East, with 70% of residents stating they hadn’t been affected. Similarly, London residents would be most likely to leave their bank if they suffered a technical failure, with 58% stating they were either very likely or fairly likely to switch, compared to just 17% in the South East and 17% in Wales.
As well as relating to the current access to digital services being best in wealthier areas, this might also reflect the different demographics at play in each area. According to Statista, in 2022, the median age of London’s population was 35.9, while that rises to 42.3 in the North East, 42.9 in Wales and 43 in Scotland. As technology gaps close and London’s younger population disperses through the country later in life, the likelihood consumers in other areas will leave a bank over an outage may well grow.
