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U.K.: HSBC’s “Blackout Friday” Outage

Categories : Cash does not require a technology infrastructure, Cash is a contingency and fall-back solution, Costs of cash versus costs of electronic payment instruments
January 15, 2024
Tags : Card payments, Digital payments, Mobile Payments, outages, United Kingdom
HSBC’s mobile and online services were out on Friday, November 24, causing dismay among customers relying on digital banking channels to conduct everyday transactions.
Manuel A. Bautista-González

Ph.D. in U.S. History, Columbia University in the City of New York

Post-Doctoral Researcher in Global Correspondent Banking, 1870-2000 – Mexico and South America, University of Oxford

This post is also available in: Spanish

HSBC’s Internal Systems Failed on Black Friday

“This HSBC outage will cause a real headache for a lot of its customers. In the worst cases it could prevent people making essential payments such as rent and bills, but it also falls on Black Friday, one of the busiest shopping days of the year […] We strongly advise customers that have been left out of pocket to keep evidence of extra expenses they may have incurred as a result of the outage, so they can be claimed back from HSBC. People want a bank they can depend on, and if IT outages become a regular occurrence, consumers could be tempted to vote with their feet and switch to an alternative provider – particularly with a lot of tempting switching incentives on offer at the moment. Having a back-up bank account or credit card can help, by giving consumers a way to make essential payments during outages like these.” – Sam Richardson, deputy editor of Which? Money, a consumer advocacy publication.

Last Friday, November 24, HSBC, one of the largest banks in the United Kingdom, experienced a significant mobile and online banking outage that affected both personal and business customers. A glitch in HSBC’s “internal systems” caused the outage, which lasted most of Black Friday, one of the year’s biggest shopping days.

At 8:42 AM, HSBC said, “Some customers [were] having trouble accessing banking services as usual.” As of 6 PM, the bank had not solved the “continued, intermittent disruption.” An hour later, HSBC said debit and credit cards and contactless payments were working as usual and asked customers to check balances at an ATM. The crash did not impact “First Direct or M&S Bank customers,” said HSBC.

Irate Customers

“I’m not able to open the app to pay my rent due today. I was expecting the bank would send a message or an email explaining why, but instead I had to find out online. It doesn’t matter if it’s Black Friday tonight or not, I’m not able to use my money and nobody informed me about why that’s happening.” – Marius Acsinte, 34.

Customers complained on X about the HSBC app, while some said they could not pay for shopping as point-of-sale (POS) terminals declined their transactions.

A Better Banking Experience?

A friend in Oxford alerted me about the outage.

“In the morning, I wanted to see how much money I had to make purchases as it was payday, and [the app showed an] error [message]. I tried online on the website, and it didn’t work either. On Twitter, I saw that everyone was complaining, and no one could access their money. HSBC said they were improving the app, but it obviously had a bug. I called to raise a complaint, and they gave me compensation. But the issue did not get fixed. This [Saturday] morning [November 24], it kept showing me an error. […] I was told my money was safe, but nothing could assure me. I also cannot access my accounts; I can’t pay some of my bills. A friend [traveling in Spain] couldn’t pay for his taxi [with his HSBC card] and had to go to an ATM to withdraw money,” – Alejandro Rubio, 33.

I tried logging into the HSBC app and website, but both were unresponsive, showing a legend saying the bank was “performing a system upgrade to bring a better banking experience” (see Illustration 1, A). I had thought of doing some Black Friday shopping. Still, the blackout made me nervous, so I refrained from making purchases or transactions with my HSBC debit card and decided to pay with cash until HSBC restored its mobile and online banking services.

Illustration 1. HSBC: Black Friday’s Error Messages, November 2023

On Saturday morning, November 25, HSBC said that “some services [might be] slower as customers log in. We’re really sorry to those impacted and we’ll continue to monitor systems closely.” An HSBC executive who called me on Monday, November 28, reiterated the bank had restored its services as of early Saturday. Still, many customers (including me) could not access mobile and online banking channels as of late that day (see Illustration 1, B).

Past Outages

“While clear progress has been made, there is still distance to travel to a point where firms across the sector reach the level of operational resilience we expect to see. This has been highlighted by a variety of operational outages still occurring frequently, such as payment outages, app and website failures, and incidents at third party providers.” – David Bailey, BoE executive director for banks supervision.

This is not the first time that HSBC has experienced a digital outage. The bank’s mobile and online banking services experienced disruptions in November 2018. On November 23, coinciding with an outage in HSBC’s app,  the U.K. Parliament’s Treasury Select Committee launched a formal inquiry into banking IT failures. Then, Nicky Morgan, the committee chairwoman, said:

“Millions of customers have been affected by the uncertainty and disruption caused by failures of banking IT systems. Measly apologies and hollow words from financial services institutions will not suffice when consumers aren’t able to access their own money and face delays in paying bills. As bank branches close and customers are ushered towards online services, the availability of those services is vital.”

In November 2022, HSBC’s card payments, mobile and online banking services failed, to the great dismay of its U.K. clients. Sam Bailey tweeted: “This is ridiculous, I had to walk out of the supermarket without my shopping as my card was declined and the ATM rejected my card as well. Even online apps not working, I can’t use the chat function and all your phone lines are closed!”

In May 2023, HSBC’s online banking went down, leaving customers unable to navigate their banking app or even log in to the platform. “@HSBC_UK, please URGENTLY look into why customers can’t make international payments to known payees?? Urgently need to make a regular payment, which I’ve done monthly for the past 18 years with no issues, but the payee details have been deleted. Customer services can’t help,” tweeted Lindsay Ring.

Cash Increases the Resilience of Payment Infrastructures

“Operational risk [is] the type of risk that affects systems and processes. Operational risk can be broken down into natural and man-made hazards. Examples of natural hazards are […] ‘non-malicious risks’ such as fire, floods, severe weather and pandemic. Man-made threats, or ‘malicious risks’, could be physical and cyber-attacks, IT system outages and third-party supplier failure. This can come from human errors and management failures, and from external events and external actors.” – Elisabeth Stheeman, an external member of the BoE’s Financial Policy Committee.

The HSBC outage highlights the need for a more resilient payment infrastructure to withstand disruptions. In April 2022, the Bank of England (BoE) urged banks to increase their “operational resilience” and speed up their recovery processes from outages affecting their services to avoid undermining public confidence in the financial sector.

The HSBC outage extends a long list of recent crashes affecting payment providers that highlight the need to build resilience in payment infrastructures, including the Geocom POS network in Uruguay, the Worldline payment processor in France, the Optus network provider in Australia, and the RedSys payment gateway in Spain, to name but a few.

Time and again, consumers’ and merchants’ reliance on digital payments increases the vulnerability of payment infrastructures to natural and malicious shocks. Cash has a role in building robust payment infrastructures as it provides a secure alternative when digital payments are down.

This post is also available in: Spanish