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August 23, 2010

Barclays outage: ‘The cleaner did it!’

Thecollapse ofBarclays' payments system this weekend could have been caused by something as simple as "a cleaner pulling out the wrong plug", according to an industry expert.

By Verdict Staff

The collapse of Barclays’ payments system this weekend could have been caused by something as simple as “a cleaner pulling out the wrong plug”, according to an industry expert.

Customers were unable to make card transactions, use ATMs or access online banking and retailers could not accept payments from 2pm on Saturday for around 20 minutes.

The IT shutdown is embarassing for Barclays because it positions itself as an innovator in card payments. It has spent millions implementing and advertising its new contactless card technology and Barclaycard Freedom, its loyalty programme, which are designed to make shopping more convenient for consumers and retailers.

Barclays spokesman Alan White told Cards International the bank will launch an internal investigation into how it can avoid a repeat collapse. He claimed the bank already knew what had caused the problem, but declined to say what it was.

“I think that our customers can be reassured that we were able to restore the problem swiftly,” said Alan White, a spokesman for Barclays.

“Innovations such as m-banking or internet security would not have been affected by this temporary technical glitch. This situation would not discredit any of the innovative services that we provide to our customers.”

An industry expert, who did not want to be named, said there could have been a number of reasons for the breakdown. The most likely is that there was a problem with Barclays Bank’s in-house core banking system, because all of the bank’s platforms – online, credit and debit cards and ATMs – were affected.

If the problem came from its credit cards division, Barclaycard, the main culprit is likely to be its legacy Triumph system. External networks like Visa, MasterCard or the Link ATM network are unlikely to be at fault because other banks in the UK were not affected.

The source said the problem could even have been caused by something as simple as “a cleaner pulling out the wrong plug”.

DBS, a Singapore-based Bank, recently suffered from a similar collapse of its banking systems. Its online banking, ATMs, cards and point of sale platforms broke down, leaving customers unable to make transactions between 6.30am and 10am on Monday 5 July.

DBS’s domestic regulator, the Monetary Authority of Singapore, criticised the bank for “inadequate management” and the lack of “a robust technology risk management framework” after DBS presented the findings of an internal review.

Asked if it would investigate Barclays, the Financial Services Authority said it would not comment on individual cases. A separate industry insider said the short length of the outage, at 20 minutes, was unlikely to attract the attention of the regulator. He added the bank could have faced bigger problems if the shutdown had happened on a week day, when other transactions like direct debit payments would have been affected.

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