Experts Comment: How Have the Recent Banking Outages In the UK Affected SMEs?

On Friday, 28 February, major banks across the United Kingdom were hit by outages that prevented users from being able to log in to their accounts. The incident occurred on pay day for many people, meaning that users weren’t able to access funds to make purchases, pay bills, run their businesses and more.

The BBC reports that in excess of 1.2 million people were directly affected by the outages, with data from HSBC revealing that on average, customers were forced to wait two hour before they were connected to customer service representatives – a long time by any standards, but especially long when considering that the usual wait time is abut five minutes.

Of course, the technological failure has a far larger impact than that felt by individual consumers, not that their experiences ought to be discounted. The major concern of business leaders and the government, more generally, is that outages such as this have the potential to have disastrous effects on business operations. Banks and the banking system are part of the foundation of any country’s economy, and, as such, it’s essential that they run efficiently and effectively.

Thus, the UK’s House of Commons Treasury Committee issued a request to major banks affected by the outage to submit letters outlining what they’ve referred to as “the impact of IT failures” – as such, they received letters from the likes of HSBC, TSB, Nationwide and Lloyd’s.

In a crude summary of the banks’ reports, specifically regarding how their customers were directly affected, the letters tended to downplay the impact of the outage. For instance, HSBC noted that only some of their customers were affected, and even so, they still had access to telephonic payment systems. Others boldly stated that the issue was sorted out within an hour or two and that the issue wasn’t as widespread as many believed

Incredibly, a few banks, including Nationwide, have even asserted that their downtime was “not linked to incidents affecting other providers on the same day” (courtesy of Nationwide’s letter to the committee). HSBC echoed the sentiment – “this incident was unrelated to the disruption experienced on that day by some other UK high street banks, which was widely reported in the media” (courtesy of HSBC’s letter to the committee).

How Have Banking Outages Affected Businesses?

Unsurprisingly, consumers and businesses affected by the IT failure have expressed immense frustration at this response and apparent refusal to take full responsibility for what happened, never mind the banks’ apparent collective avoidance of the seriousness of the issue.

There’s little doubt that the widespread outage caused issues for consumers and businesses alike – even though a few banks, TSC specifically, have even claimed that the incident “did not constitute a full outage”. The banks’ general “it wasn’t that big of a deal” response just doesn’t seem to be good enough.

Rather, it was a big deal, it caused major inconveniences for individuals and disruptions for businesses, and it’s led to a serious loss of trust in UK high street banks.

In the wake of the incident, we spoke to a group of experts about the significance of the outage and how it has affected businesses, particularly small and medium-sized enterprises (SMEs) in the UK.

Our Experts

• Laurent Descout: CEO at Neo
• Chelsea Hopkins: Social Media and PR Manager at Fasthosts
• Tom Hewson: CEO of RedCompass Labs
• Faraz Kahn: Professional from MeetingRoomz
• Nik Charalampous: CEO of CredAbility
• Andrea Reynolds: CEO and Co-Founder of Swoop Funding
• Martin Hartley: Group CCO of emagine
• Christina Kosmowski: CEO of LogicMonitor

Laurent Descout, CEO at Neo

“Bank outages don’t just inconvenience individuals—they hit businesses hard, too. For SMEs, a failed payment can mean serious disruption, delayed supplier payments, or even the difference between making payroll and not. Unlike larger corporations, small businesses often lack the financial cushion to absorb these shocks, making them particularly vulnerable when payment systems fail. At the heart of the issue is banks’ reliance on outdated legacy technology, which struggles to keep up with modern payment demands.

When issues occur, banks often prioritise their largest corporate clients, leaving SMEs at the back of the queue. As a result, more small businesses are turning to fintech alternatives that offer greater reliability, flexibility, innovation and customer support.”

Chelsea Hopkins, Social Media and PR Manager at Fasthosts

“The recent surge in banking outages across the UK has had a profound and disproportionate impact on small and medium-sized enterprises – revealing significant vulnerabilities in the financial infrastructure. Major UK banks experienced over 803 hours of unplanned IT failures in the last two years, leading to failed payments, delayed payrolls, and hindered access to essential banking services. For SMEs, these disruptions can have a significant impact, especially around critical times like tax deadlines and when submitting payroll. It is certainly detrimental to the general operations of businesses.

“For SMEs, these banking outages are more impactful than minor inconveniences, and they can result in tangible financial losses, strained supplier relationships, and negatively impact customer trust. The effect of these incidents not only erodes SME’s trust in the financial system, but it can damage their own reputation and financial stability. It’s critical for banks to update their IT systems, including being more vigilant with cybersecurity and strengthening their system redundancies, in order to minimise the risk and impact of these financial disruptions on SMEs.

“To mitigate these risks for SMEs, businesses are advised to adopt a multi-banking strategy – maintaining accounts with multiple banks. This way, SMEs can ensure continuous access to financial services, even during outages, in order to minimise the impact. Multi-banking strategies improve operational resilience, support regulatory compliance, and safeguard cash flow. I believe the recent banking outages serve as a stark reminder of the systemic risks in the UK’s financial infrastructure for SMEs. The banking outages remind us that the financial systems can experience vulnerabilities, too, and we are forced to take proactive measures like multi-banking to navigate these challenges and ensure business operations can continue in times of disruption.”

Tom Hewson, CEO of RedCompass Labs

“While people’s frustrations with banks’ regular outages are completely understandable, payment systems are incredibly complex and more fragile than we are willing to admit (or the regulator be willing to accept). Fixing this problem isn’t easy. Banks are expected to deliver this flawless, resilient (mostly free) service while at the same time innovating and modernizing their payment systems to ensure they meet customer expectations and regulatory requirements.

 Banks are being held back by increasing costs, a lack of deep payments expertise, and procurement and information security processes that were designed almost 20 years ago after the 2008 financial crisis and wholly unsuited to exploiting new technology such as AI that can manage these levels of complexity when assisting AI-enabled payment experts.

 Banking is a notoriously tricky balancing act. It looks elegant and straightforward when all is going well, but it often only takes a wobble or bump in the road to take a whole system down. That’s why banks tend to play it safe. But with mounting scrutiny from regulators and governments, hundreds of thousands of frustrated customers, and millions in compensation payouts, the message is clear: business as usual isn’t an option.

They need to invest more in both payments expertise and technological innovations to enable them to deliver more, faster. Applied AI, trained on the right data and used by the right people, is emerging as the only real solution banks can deploy tactically to better automate and speed up payments modernization.”

Faraz Kahn, Professional from MeetingRoomz

Nik Charalampous, CEO of CredAbility

Andrea Reynolds, CEO and Co-Founder of Swoop Funding

“These outages could have a serious impact on SMEs which often use their bank as their first resort for funding in a crisis. The result could be that an otherwise-viable business is unable to meet payroll or other commitments.

While Swoop works with banks, we also have partnerships with many alternative and challenger lenders that are able to offer specific niche products and operate at speed. Unfortunately, too many SMEs are unaware that these options exist. Our experience is that we often have to look beyond banks to find the right kind of funding for SMEs’ specific needs, particularly if they are up against the clock.”

Martin Hartley, Group CCO of emagine

 Christina Kosmowski, CEO of LogicMonitor

“Recent power outages at Heathrow, across Spain and Portugal, and now on the London Underground have highlighted the critical need for AI-powered observability, not just in limiting tech errors that might lead to a blackout, but also when restarting systems after a disruption.

The focus in these situations must be on accuracy over speed when restoring proper system functionality.

That’s why observability should no longer be seen as a ‘nice-to-have’, it’s become a critical safeguard, ensuring systems are truly functional and ready to return to business-as-usual.

By adopting AI-powered observability, SMEs can move from reactive recovery to proactive resilience, building a safety net that not only detects issues but anticipates them, and providing a level of system visibility that traditional monitoring tools cannot match.”