Originally published by Financial IT
Today’s highly interconnected world has created a fertile ground for a significant surge in the goods and services accessible through the Internet, and the banking industry is no exception. Gone are the days when you’d cash in a cheque or use your local ATM to view your bank balance – now transfers, transactions and other features are accessible easily from an app on your phone. However, this convenience also brings with it unique challenges and potential risks in navigating the digital age. Present-day customers expect seamless, around-the-clock availability from any bank they engage with, and even the slightest moment of downtime can result in their departure, especially when personal finances are implicated.
Over the course of recent months, thousands of customers of Lloyds Bank, Halifax, Bank of Scotland and TSB Bank have reportedly been locked out of their online banking apps or have experienced downtime. This issue is most prominent around payday as servers are overwhelmed and cannot keep up with the influx of transactions in a small space of time, which inevitably leads to delays. Last month, Co-op bank customers threatened to switch to competitor banks as their mobile app stopped working for three consecutive Fridays in a row, putting customers out of pocket as they were unable to make payments.
Here are a few key points for banks to consider when it comes to the importance of uptime around payday:
Why outages are more likely to occur around payday
Payday has come and the first port of call is typically to jump on your banking app to check balances without a thought to the server capability. The truth is that when customers flood to their banking apps, this can overwhelm servers, in some cases to the extent of downtime if servers are not scaled to accommodate the capacity. The problem is that when downtime is persistent, the ripple effects of the outage are intensified as customers can lose trust in the bank.
Payday also comes with greater stakes for financially motivated attackers. Opportunistic hackers are aware of the pressure that banks are under during this busy period and will exploit this vulnerability, as they know banks are more likely to cave to demands. High volumes of traffic are prone to overwhelming servers, making them susceptible to both outages and cyber-attacks – such as DDoS attacks whereby the attacker overwhelms the server to purposely create downtime.
The consequences of downtime to banks
Downtime can result in customers losing faith in their bank. It can even damage the most loyal of customer relationships, for example, the reoccurring Co-op outage has led long standing customers of up to 20 years to switch banks. Even a short time experiencing downtime can damage a bank’s image and reputation, especially when you consider the financial impact it can have on the customer such as the inability to make payments. This poses a problem for banks, because a negative brand image has the potential to be a factor that can hamper profitability, despite the potential years of effort invested in establishing its presence. 57% of savvy digital-native millennials express an immediate negative impression of a brand due to website downtime.
When it comes to online shopping, research by Hyve found that 1/3 of UK consumers would move to a competitors’ website after less than 30 seconds, if their go-to brand suffered an outage. Now imagine how heightened this static becomes when it’s no longer a case of e-commerce, but one’s entire livelihood.
Practical steps banks can take to minimise downtime
The solution lies in the cloud. Its on-demand scalability allows banks to easily accommodate the peak demands around payday without having to maintain a large volume of costly resources on standby for just one or two days a month. Cloud scalability allows banks to adjust resources as needed during periods of high traffic, such as payday, ensuring they can effectively handle the demand. Likewise, during quieter periods, with the likes of a private / hybrid cloud, banks can scale back resources, such as CPU or RAM, to save costs and minimise waste.
Consequently, the cloud empowers banks to operate efficiently while also achieving cost savings. It’s important to remember there are multiple cloud options, some more suitable than others, depending on a bank’s specific needs.
For banks, having a comprehensive understanding of the range of cloud options available is important to accommodate diverse IT requirements. Proper planning and communication with cloud providers will enable banks to have robust IT systems, particularly during peak periods like payday.
However, it’s important to acknowledge that despite meticulous planning, and many prevention methods being put in place, outages are still likely to occur at some point. For instance, research by the Uptime Institute reveals a growing trend in outages, with 80% of data centre managers reporting some form of outage within the past three years. Hence, what truly matters is how banks can manage and learn from outages. The same report by the Uptime Institute highlights that companies experiencing repetitive downtime face costs that are 16 times higher than those that don’t. With this in mind, banks should consider investing in outage management, encompassing system backups and a comprehensive disaster recovery plan to minimise the duration of outages and mitigate their impact. Banks should also explore the option of outsourcing management to help scale cloud resources, thus alleviating the burden on in-house IT teams as every outage counts.
The bottom line is banks can either proactively mitigate downtime or else lose customer confidence, which ultimately impacts a bank’s reputation. In an age of online banking, where transactions happen more frequently than ever before, banks need to have a cloud solution in place that can scale all year round to keep up with the continuous advances of technology and growth of online transactions.
There’s no time like today for a strategic change
In today’s tech-driven world, banks need to ensure that they are equipped with the latest technology to meet the growing demands of their customers. With online banking becoming more popular than ever before, it is vital that banks have a cloud-based solution that can not only handle the high volume of online transactions but can also cater to the continuous advances in technology.
The importance of reducing downtime cannot be overstated as it directly impacts customer confidence. Downtime can lead to dissatisfaction among customers, affecting their trust in the bank and ultimately damaging its reputation. Therefore, banks should adopt strategies to mitigate downtime proactively. This will help them to avoid potential losses and maintain customer loyalty.
Banks should also consider partnering with reliable cloud providers to create a robust and scalable cloud infrastructure that can address all their technological requirements. By making such strategic investments upfront, banks can stay ahead of the competition, keep their customers satisfied and retain their reputation in the market.
