Banking on resilience: How UK banks can strengthen their IT systems to avoid outages

In February 2025, the UK Parliament’s Treasury Committee launched an inquiry into IT failures across major banks. The inquiry uncovered over 803 hours – equivalent to more than 33 days – of unplanned system outages in just two years. This unusual government intervention into the affairs of private enterprises reinforces the urgency for financial services to ensure the reliability and resilience of banking IT systems to avoid widespread disruptions for customers.

The pressure of this inquiry is compounded with new rules on operational resilience from the Financial Conduct Authority (FCA). Financial institutions must ensure they meet its requirements mandating that banks prevent, adapt to, and recover from operational disruptions to safeguard customers and the broader financial system.

Strengthening operational and business resilience is no longer optional – it’s essential. Banks have to analyse past outages, identify recurring vulnerabilities, and implement proactive measures to prevent future mistakes.

Why bank IT outages are on the rise

The financial industry has undergone rapid digital transformation, with banks continuously introducing new technology products and services. While this innovation has enhanced customer experiences, it has also resulted in highly complex IT environments that are increasingly difficult to manage.

The competitive landscape only adds more pressure. Consumer expectations are higher than ever, driven by the rise of digital-first banks that set a new benchmark for seamless, always-available experiences. Unlike traditional banks, these newer entrants are digitally native, allowing them to be more agile. In contrast, many established banks still rely on legacy systems and on-premise technology, making it more challenging to match the speed and flexibility of their digital-first competitors. To stay ahead in the industry, traditional banks are racing to develop new services, further complicating their IT environments and increasing the risk of disruptions.

This added complexity is at the heart of the rise in outages. Banks operate across a mix of cloud platforms, legacy systems, and digital services, creating intricate technology ecosystems. Many institutions are structured around individual parts of their technology stack, often lacking full visibility into the end-to-end customer experience. As a result, even a minor miscalculation within a software update can introduce single points of failure, leading to widespread outages that disrupt services.

To mitigate these challenges, banks have adopted monitoring tools to gain visibility into their systems and reduce outages. However, many rely on traditional monitoring solutions that struggle to track the full scope of modern IT ecosystems. Without a more advanced, proactive approach, banks remain vulnerable to service failures that impact both their customers and reputation.

Stronger systems, happier customers

Banking outages aren’t just operational disruptions – they have real consequences for customers. As digital ecosystems grow more complex and regulatory scrutiny intensifies, service disruptions don’t just frustrate customers – they push them towards competitors. People depend on banking services for essential needs, and system failures can mean missed bill payments, or even customers not being able to buy food or fuel. Small businesses can also face cash flow issues, damaging their reputation and customer trust.

Beyond financial setbacks, outages erode trust in banks and the wider financial system. Customers expect seamless, always-on services, and when those fail, frustration and uncertainty grow. To rebuild trust, banks must focus on resilience – ensuring swift recovery when outages occur.

Transparent communication from banks to their customers during service disruptions is also essential. Banks must provide real-time updates, clearly explaining issues and outlining their resolution plan. By combining stronger resilience with open communication, banks can protect both their customers and their reputation.

Building resilient banks for a digital-first future

To enhance resilience and build a robust digital infrastructure, banks must move beyond a reactive approach to IT outages. The key lies in real-time visibility. Banks need continuous insights into system health, user experience, and third-party dependencies to mitigate risks and respond swiftly to disruptions. Advanced AI-powered observability systems, combining automated root cause analysis with real user data, can help identify affected customers and deliver targeted support before minor issues escalate into widespread outages.

At the same time, financial institutions must balance innovation with stability. Speed to market is crucial, but without strong processes, rigorous testing, and real-time monitoring, rapid change becomes a major instigator of outages. The challenge is finding the middle ground between agility and the process discipline banks have historically relied on – ensuring new features enhance the customer experience without compromising resilience.

However, resilience isn’t just about bank’s internal systems – it extends to the third-party providers they rely on. Failures in external services can have widespread effects, and without full visibility into these dependencies, financial organisations risk being blindsided by disruptions they don’t directly control. A shift to a customer-centric view of resilience is essential. Instead of just monitoring internal infrastructure, banks must track real customer journeys – payments, loan applications, and digital transactions – to detect performance degradation in real-time.

The road to resilience

The UK Treasury Committee inquiry and new FCA operational resilience rules show banks are under increasing scrutiny. To rebuild consumer trust and navigate regulatory challenges, banks must harness observability data, leveraging predictive analytics and synthetic monitoring for deeper insights.

While eliminating outages entirely may be unrealistic given the complexity of modern banking IT environments, enhancing visibility and resilience can significantly mitigate their impact and risk. By prioritising these strategies, banks can strengthen their operational stability and ensure a more reliable experience for their customers.