Lloyds Bank digital banking problems an industry warning

Lloyds Banking Group customers are experiencing online and app-based banking problems for a second day, affecting customers of Lloyds Bank, TSB and Halifax.

The problems, which left some customers unable to access their accounts, originally began on Wednesday 11 January but the problem was reported to be fixed around 3pm the same day. However, the problems have appeared once again.

“We have been having intermittent service issues with internet banking. We are working hard to restore a full service for our customers and apologise for any inconvenience caused,” said a Lloyds Banking Group statement.

The bank has invested heavily in technology to make life easier for customers that demand digital banking services online or on mobile apps.

But the latest problem is a clear warning to banks such as Lloyds that an over-reliance on digital banking channels could create problems in the future. 

As part of its cost-cutting plan, Lloyds announced in 2015 that it will cut 9,000 jobs and close around 150 branches. Part of this plan includes the move to digital channels, which are becoming more important to banks to cut costs and increase services and consumers for convenience.

Lloyds is not alone in its branch closure strategy, with RBS another UK example of a bank cutting jobs and branches and replacing them with digital capability.

According to recent research from Visa, just under three-quarters (74%) of the UK’s consumers use mobile devices to bank.

The British Banking Association (BBA) said mobile banking apps are driving growth in digital as consumers increasingly access services through these apps on mobile phones rather than through internet banking websites.

In its Way We Bank report, the BBA revealed there were 11 million log-ins to banking apps every day in 2016, and 4.3 million log-ins to internet banking via a bank’s website.

In response to this trend, Lloyds has invested in technology to support retail customers that enable it to provide the same service at a lower cost.

In March 2016, Lloyds Banking Group said customers of Lloyds Bank and Halifax can receive face-to-face mortgage advice via video link following a successful trial of the service.

Customers who are unable to or prefer not to travel to a branch can opt to meet with a mortgage consultant on their computer. The bank said telephone appointments are rapidly being replaced by video calls, with a third of appointments that would normally be done over the phone now taking place over video link.

The bank also previously announced that customers can upload documents for identification and verification purposes with smartphones, tablets and computers that have cameras, thereby reducing the need to visit a branch.

However, all the fancy digital technology in the world means nothing when online customers can’t gain access to their accounts.

In the UK, there are a number of new banks that have emerged with technology as their differentiator. This combined with the government introducing the seven-days bank account switching service, which make it easy to change current account supplier, means outages could have a negative business impact for banks.

When discussing a recent Accenture report on the increased use of software roots for banks in customer support, Peter Kirk, head of distribution and marketing services at the IT firm, warned: “Banks need to recognise that, for many consumers, including the younger generation, the shift toward computer-generated services cannot be at the expense of access to human services at their local bank. The demand for branches seems set to continue.”