Survey highlights the reputational and business risks associated with IT failures
- Published: Thursday, 05 March 2020 09:37
New research into the reaction of customers to IT and technical failures in UK banking services shows the wider impact that IT failures can have on business stakeholders. Carried out by IT support provider Probrand.co.uk, the research revealed that 89 percent of UK adults would lose trust in a company following an IT failure or technical issue.
The research surveyed 1,009 UK adults and found that 1 in 2 (51 percent) would consider switching banks following issues with their IT systems.
When asked about their motives for changing banking provider, 43 percent of respondents said they felt that their money was unsafe with a bank which had experienced IT issues. 41 percent feared technical issues would happen again whilst 39 percent were worried that their personal data may be at risk.
The top five reputational impacts of IT failures identified by the research are:
- Loss of customer trust – technical faults will deter new customers to bank with the bank in question; existing customers are likely to consider switching to a ‘more secure’ competitor.
- Loss of market share – a financial business which is unable to manage their IT infrastructure will lose clients, investors and even shareholders, as stakeholders lose confidence in their products and services.
- Loss of data – this can be anything from customer payment details and direct debits to sales data and entire databases, depending on the severity and nature of the fault. A loss of data can result in loss of customers, fines imposed and in some cases compensation may need to be paid out to customers. It was reported that TSB made huge losses following an IT meltdown in 2018. The computer issues faced caused them to lose 80,000 customers switching to other banking providers compared to 30,000 in 2017.
- Financial loss – the failure of IT systems can incur a huge amount of costs financially. In addition to the cost of rectification and data retrieval by a technical team, there would be an interruption of normal services; there may also be fines imposed by regulators. The Royal Bank of Scotland were fined £56 million following an IT meltdown in 2012 which caused them to lose customer payments and direct debits. Following the IT meltdown RBS were forced to cut staff bonuses, redress their own customers and compensate customers of other banks who were also affected.
- Unproductive downtime – system failures are not limited to the external customers, they can often result in downtime internally resulting in payments stopping and staff being unable to work efficiently if at all; the end result of this is a loss of productivity and output.