After a series of computer glitches that left most customers unable to access their banking services, Barclays is to compensate its customers with millions of pounds. The bank is expecting to pay between £5 million and £7.5 million in compensation for distress and inconvenience caused by disruptions early this year, as stated in a recent letter to Members of Parliament (MPs).
The disruptions, which started late in January, lasted for a number of days and coincided with key financial deadlines, such as payday for many people and the deadline for self-assessment tax returns. Clients were severely disrupted from making transactions because 56% of Barclays’ online payment system collapsed. The bank cited the collapse of this system as a “severe degradation” in the operation of its mainframe computer, which handles large volumes of data for the institution.
To rectify the issue, a software fix provided by Barclays’ mainframe supplier is currently undergoing rigorous testing. However, compensation figures could increase significantly, as MPs were informed that up to £12.5 million may be paid out when factoring in all outages experienced from January 2023 to February 2025.
The size of Barclays’ payout is likely to be the biggest made by any bank in the last two years. For comparison, the Bank of Ireland, which suffered similar service outages, paid only £350,000 in compensation, so Barclays’ payment will be much bigger.
Those customers who have been impacted by these outages will not always have to do anything to claim their compensation. Although some of these refunds will be issued automatically, others will involve further checks being made, with Barclays contacting those affected to ensure they get the right amount.
One of the worrying elements of the disruption is the projected increase in fraud. Barclays itself has already seen examples where people have tried to take advantage of the situation for financial benefit. The bank told MPs it would expect to hear more reports of fraud coming through in the next few weeks as customers and authorities continue to work through the full implications of the system collapse.
The Treasury Committee, tasked with managing finances, has opened an inquiry into IT failings in significant banks and how they impact clients. These inquires go further than Barclays because banking institutions within the UK as a whole have been facing technology malfunctions of this nature during recent years.
Results of the committee’s investigations show that the UK’s nine biggest banks and building societies have cumulatively suffered 803 hours of unscheduled downtime in the last two years. This is equivalent to around 33 days of service disruption, impacting millions of customers. During this time, 158 individual IT failures were reported, which underscores the persistent difficulties faced by financial institutions in providing smooth digital services.
Among banks reviewed, the longest duration of system outages was reported by NatWest, with 194 hours of outages. Close behind was HSBC, at 176 hours of outages. Barclays latest payday-related system failure is not reflected in the above figures but has only contributed to increasing anxieties regarding online banking infrastructure’s reliability.
Industry experts, as well as bank officials, have identified a number of factors for such routine IT glitches. Most of these interruptions have been attributed to technical issues with third-party vendors, system maintenance, and internal in-house software malfunctioning. Ongoing evolution in the digital bank space is particularly highlighting the necessity of having healthy IT systems for providing continuous access to customers.
Added oversight can be anticipated as the Treasury Committee continues evaluating the way that banks deal with IT breakdowns and compensate stranded customers. Because there is such heavy dependence upon online transactions now, financial firms are under tremendous pressure to reinforce their technological vigor and reduce chances for future downtimes.
As with other large banks, Barclays is under increasing scrutiny for its response to the crisis. In order to prevent such events from happening again, consumers and authorities alike are calling for stronger protections. Compensation may provide short-term relief to those affected, but the bigger question is whether banks can provide stability in a period where internet banking forms the backbone of personal and company finances.
These IT problems need to be resolved because millions of customers are depending on seamless banking services for their day-to-day financial requirements. Besides damaging its reputation, Barclays’ reaction to this crisis could also set an example for how other banks handle future interruptions of this nature.