Barclays ring-fencing project means downtime for customers

The project to separate the retail and investment banking arms of Barclays will make mobile, online and telephone services unavailable to hundreds of thousands of retail customers this weekend.

Barclays said about 800,000 customers would be affected as the bank changed sort codes as part of the ring-fencing of investment banking. Services will be unavailable from 11.30pm on Saturday 19 August until 3.30pm on Sunday 20 August.

Barclays told customers it would be carrying out work to align with new banking legislation. “We’re sorry, you won’t be able to manage your account online, by phone or in the app, or use Pingit at this time,” it noted on its website.

Following the global financial crisis of 2007-2008, which was caused by failures in the investment banking operations at the big banks, regulators set a deadline for UK banks to introduce a clear separation between retail and investment banks. This is to prevent the action of risk-taking investment banks affecting consumer savings and current accounts.

Banks must comply with this rule, which was introduced in 2011, by January 2019.

This came after Independent Banking Commission (IBC) recommendations, which were drawn up after the retail operations of UK banks suffered in the 2008 financial crisis. 

For IT departments, it meant separating individual systems and restructuring entire IT operations and outsourcing agreements. 

Ovum analyst David Bannister said ring-fencing marked a watershed, but it was only part of the post-crisis IT challenges faced by banks.

“The biggest change has been increased regulation, which has forced banks of all kinds to invest the majority of their IT spend – as much as 70% – on systems to deal with improved regulatory oversight.”