Payments to and from some of the buzziest names in UK FinTech were briefly down yesterday (Thursday) morning as the likes of Monzo, Starling Bank, Revolut, Loot and Curve suffered knock-on effects from an outage at one of their technology suppliers.
While the problem had rectified itself by around 11am, the outage (which was the second in four months following similar downtime in March) lays bare the teething problems inherent when growing and scaling a young tech firm.
The problem for upstart FinTech companies, particularly those looking to challenge the incumbent banks, is that trust and perception is everything when it comes to people’s money.
Any outage no matter how short, weakens that trust and even denying users access to their cash for just a couple of hours could have them looking elsewhere.
Of course, the incumbent banks are not immune to outages themselves with those of us locked out our online banking for the weekend or who have suffered through any number of systems meltdowns over the years knowing full well the annoyance of not being able to withdraw our hard-earned cash.
However, these banking behemoths are backed by untold billions of capital and have built up decades if not centuries of goodwill, meaning consumers are safe in the knowledge that even if Natwest’s IT systems fall over, their cash will ultimately be safe and the institution will prevail.
Your cash is still protected one way or another with Starling, Loot, Revolut and Curve (Monzo won’t have full protection until it properly launches as a bank), but the perception that they are somehow less reliable or that your money is less safe with the digital-only challenges will only become ingrained by more outages and failures.
There is rightfully much hype surrounding the likes of Monzo and Starling Bank and their potential to shake up the UK’s banking sector. One need only look at the transparent communication across social media and in-app keeping users up to date throughout the outage to see what sort of advantages they already hold over the big banks.
A centuries-old industry is not upturned overnight though, and while the five firms will quickly move on from this morning’s travails, there is still plenty of work to be done as they move through their initial teething stage.
Written by: Billy Wood