The Barclays IT glitch exposes a major flaw in our cashless society

You know the old adage about it being better to stash your money under the bed than in the bank? We wouldn’t recommend stuffing your life savings into a suitcase, but it might be worth keeping a couple of hundred ready to go – because even our cashless society isn’t immune to an IT glitch.

On Friday, Barclays became the latest financial institution to be the subject of a major IT outage: for three days, Barclaycard apps, online banking and services, cards, payments and transfers, branches and telephone banking were all “areas affected”. Worse still, the problem emerged on what is traditionally payday for many Britons.

As of Sunday morning, some customers were still experiencing problems accessing their funds and making payments (though the bank said ATMs were working as normal). One family even became temporarily homeless as the glitch derailed a house sale.

And when people took to X to complain, the bank suggested asking friends and family for help – failing that, the Trussell Trust, which is the nation’s biggest operator of food banks.

Barclays now says the issue has been resolved – and that it wasn’t a cyberattack, rather a “technical issue”. But things went south for other banking customers on Monday morning, with some Lloyds/Halifax customers reporting issues with payments.

This was a mercifully short snafu and even the Barclays outage pales by comparison to the disastrous situation at TSB a few years ago, when the botched migration of its customer records from a platform operated by Lloyds to one provided by Spanish parent Sabadell went badly wrong and left some customers locked out for a week or more.

However, the disruption only serves to highlight our reliance on the systems that keep our consumer-driven society running smoothly. And when things go wrong, a bit of cash at home might come in handy... but only if you’ve got it.

Last year, the Resolution Foundation noted that more than 11 million working-age people don’t have any rainy day savings at all – and that vast swathes of the population were living paycheque to paycheque. An empty larder, hungry children and no means of doing the weekly shop because your bank is up the creek spells trouble.

“Technical issues like these could be devastating for people who could miss important bill payments, find themselves unable to pay for essential services or risk going overdrawn – issues which could come with knock-on effects like late payment or overdraft penalties, or affect their ability to get credit or borrow money,” said Jenny Ross, editor of Which? Money.

It should be a warning to us all as we move increasingly to a cashless society. What we need is a rigorous regulator, keeping an eye on the stability of the UK’s financial IT infrastructure. That’s something the Financial Conduct Authority and the Bank of England’s Prudential Regulation Authority ought to be pushing to the very top of their to-do lists.