When banks fail, businesses pay—The Barclays outage lesson

On Friday, January 31, 2025, Barclays experienced a significant IT outage that disrupted various banking services, including online and mobile banking platforms, as well as payment processing systems. This incident coincided with the HM Revenue and Customs (HMRC) deadline for self-assessment tax returns, leading to considerable inconvenience for many customers.

The technical issue, which Barclays confirmed was not due to a cyberattack, left numerous customers unable to access their accounts, make payments, or view accurate account balances. Some individuals reported failed transactions, including critical ones like property purchases, and businesses faced significant financial disruptions due to rejected payments.

In response, Barclays extended its call center hours to assist affected customers and assured that no one would be left out of pocket due to the incident. The bank worked to process delayed payments and update account balances, aiming to resolve outstanding issues by the end of Sunday, February 2, 2025.

Regarding the tax deadline, HMRC acknowledged the situation and confirmed that late payment penalties would not be applied until March 1, 2025, providing some relief to those impacted by the outage.

By Sunday, February 2, Barclays announced that the technical issue had been resolved, with services restored and delayed payments processed. However, some customers continued to experience delays in seeing updated balances. The bank reiterated its commitment to ensuring that no impacted customer would suffer financial loss due to the disruption.

When Banks Fail, Who Pays the Price?

The Barclays outage is the latest in a series of banking IT failures that have disrupted businesses and individuals at critical moments. As financial institutions continue their push toward digital-first banking, incidents like these raise a key question: how accountable should banks be when technical failures disrupt financial transactions?

For consumers, a service disruption is an inconvenience. But for businesses, accountants, and financial professionals, an outage can mean missed payroll deadlines, rejected tax payments, and stalled supplier transactions.

Finance teams increasingly rely on real-time digital banking, but when these systems fail, there are few protections in place to shield businesses from financial loss.

A decade ago, most businesses still had access to in-person banking services as a fallback.

Today, with physical branches closing and mobile banking taking precedence, firms are left more exposed to IT failures. Barclays is far from alone—other major UK banks have faced similar disruptions in recent years, underscoring a troubling pattern of system instability at financial institutions.

Are Banks Doing Enough to Prevent Disruptions?

Under Financial Conduct Authority (FCA) rules, banks must report significant outages, but enforcement remains limited. While Barclays assured customers that all financial losses would be covered, the broader issue remains: why do these failures keep happening, and what can be done to prevent them?

In the United States, financial regulators have introduced stricter guidelines on IT resilience, requiring banks to maintain backup systems and ensure rapid recovery from failures. The UK has yet to implement similar rules, leaving businesses exposed to an outdated regulatory framework that does little to guarantee uninterrupted access to financial services.

There’s also the issue of preparedness. Should businesses and accountants rethink their reliance on a single banking provider?

Some corporate finance professionals advocate for maintaining secondary accounts with different institutions to mitigate the risk of outages. However, for smaller firms and individual taxpayers, such solutions are often impractical.

A Turning Point for Business Banking?

The Barclays incident highlights an uncomfortable reality: digital banking may be more efficient, but it is not infallible. For businesses operating on tight cash flow cycles, a single-day outage can have cascading effects.

Regulators may now face pressure to reassess their approach to IT failures in banking, particularly when they coincide with major financial deadlines. Until stronger safeguards are in place, businesses, accountants, and finance teams may have little choice but to build their own contingency plans.

Because when banks fail, it’s their customers—not the banks—who pay the price.