What happened
- Barclays and Santander suffered major IT or service outages earlier in 2025, which disrupted online and mobile banking services for large numbers of customers. For example:
- Barclays experienced a multi-day outage at the end of January 2025, during which 56 % of online payments failed. (Financial Times)
- Santander UK also had a disruption that left customers unable to make online or card payments; the outage affected mobile and telephone services. (The Guardian)
- Following these disruptions, the banks saw significant numbers of current‐account customers switch away. According to data from the Pay.UK “Current Account Switch Service” (CASS):
- Barclays saw over 22,000 customers switch away in the quarter to June 2025, with fewer than 4,000 switching in, giving a net loss of more than 18,000 accounts. (fstech.co.uk)
- Santander UK recorded a net loss of approximately 23,015 current accounts in the same period (three-month quarter) due to more customers leaving than joining. (fstech.co.uk)
- The volume of switching overall was high: in one quarter (July-Sept 2025) there were about 265,000 full current account switches in the UK. (The Independent)
- Barclays has said it expects to pay up to £7.5 million in compensation to customers due to the outage mentioned above. (Financial Times)
Why the outages appear correlated with account losses
- Digital / mobile banking experience is a major factor for customers when choosing or switching a current account. According to Pay.UK’s research cited: 44 % of switchers said “online or mobile banking” was their main reason for switching. (fstech.co.uk)
- Service outages undermine customers’ confidence: inability to access funds or pay bills at critical moments (e.g., payday, tax deadlines) can drive customers to switch. For example:
“For families and individuals living pay-cheque to pay-cheque, losing access to banking services on payday can be a terrifying experience.” — Meg Hillier, Treasury Select Committee Chair (Financial Times)
- The data suggests that the banks with the largest service disruptions (in hours and severity) are also seeing higher net losses of accounts.
Case Study Highlights
Barclays PLC
- Outage: Multi‐day system failure in January 2025; 56 % of online payments failed. (Financial Times)
- Compensation: Up to £7.5 m expected payments to customers. (Financial Times)
- Net Account Loss: >18,000 accounts switched away in the quarter to June 2025. (fstech.co.uk)
Santander UK
- Service Disruption: Mobile, telephone and card payment issues; many customers unable to make payments. (The Guardian)
- Net Account Loss: Approx 23,000 net accounts lost in the same timeframe. (fstech.co.uk)
Implications & Commentary
- Customer loyalty is fragile: Even large, established banks are vulnerable to customer churn if their digital service fails during critical windows.
- Digital experience is table stakes: With so many switching options and switching processes streamlined, outages and poor performance become key competitive vulnerabilities.
- Compensation is significant but may not fully offset reputational damage: While Barclays is committing up to £7.5 m, the loss of thousands of customers suggests broader impact beyond direct payouts.
- Switching market is active: With ~265,000 account switches in a quarter, banks must compete not just on rates and incentives but on reliability and service.
- Regulatory scrutiny rising: The outages have drawn attention from the Treasury Committee and other regulators, meaning banks might face more stringent expectations around resilience and compensation.
- Here are detailed case studies and commentary on the situation involving Barclays PLC (“Barclays”) and Santander UK (“Santander”) — both of which recently reported significant net losses of current-accounts, in the context of major service outages.
Case Study 1: Barclays
What happened
- In early 2025, Barclays suffered a major IT outage: a three-day incident starting 31 January caused significant disruption, including a reported 56 % failure rate of online payments. (Financial Times)
- Barclays subsequently informed the Treasury Select Committee that it expected to pay up to £7.5 million in compensation to customers. (Financial Times)
- Data from the Pay.UK “Current Account Switch Service” (CASS) show that for the quarter ending June 2025, Barclays had over 22,000 customers switch away and fewer than 4,000 switch in — yielding a net loss of more than 18,000 current accounts. (fstech.co.uk)
Why it matters
- Digital access and reliability appear to be strong drivers of account-switching behaviour. In the Pay.UK research, “online or mobile banking” was cited by 44 % of switchers as their top reason. (fstech.co.uk)
- For Barclays, this large net loss of accounts suggests that the outage had a meaningful effect on customer confidence and loyalty.
- Though compensation is being offered, the reputational cost and customer churn may represent a far larger long-term cost.
Further commentary
- Barclays has emphasised that it will ensure customers are “not left out of pocket” due to the outage. (The Guardian)
- From a strategic perspective, Barclays faces increased competition from banks emphasising digital reliability and customer experience; an outage of this magnitude can amplify risk of customers switching.
- Analysts will view Barclays’ experience as a warning for other large banks: service levels aren’t simply operational issues but have direct implications for customer retention and switching risk.
Case Study 2: Santander UK
What happened
- Santander UK experienced a mobile/online services disruption on 6 March 2025, which left customers unable to make certain payments or transfers. (The Guardian)
- According to switching data, Santander recorded a net loss of ~23,015 current accounts (users switching away minus switching in) in the quarter. (fstech.co.uk)
Why it matters
- Much like Barclays, the correlation between service outage and customer attrition is evident: the disruption occurred earlier in the year, and the switching losses followed.
- Santander’s situation also highlights the modern banking environment: customers can (and will) move if digital services fail them, especially when easier switching is available.
Further commentary
- While Santander apologized and stated that no customer would be “left out of pocket” as a result of its disruption. (The Guardian)
- The bank still needs to manage reputational fallout and ensure that stability of its digital services is restored credibly.
- In competitive terms, large banks like Santander face the dual challenge of maintaining operational reliability and competing on customer experience, rates, marketing. Even short-term failures can tip the balance.
Broader Insights & Commentary
1. Customer switching behaviour
- In the UK, the current-account switching service (CASS) shows significant movement: in 2024 around 1.2 million current accounts were switched. (The Standard)
- The data for Q3 2025 show major bank-specific losses: Santander net ~–23,000, Barclays ~–18,300, Halifax also a notable negative. (Proactive Investors)
- Crucially: mobile/online banking performance is now a leading reason consumers switch banks. The outages of Barclays and Santander arguably catalysed the switching.
2. Risk-and-cost for banks
- Technical/service outages lead not only to direct compensation costs (for example Barclays’ £7.5 m estimate) but also to longer-term customer churn. Losing ~18-23k customers in a quarter may translate into lost fee income, cross-sell opportunities, and brand damage.
- Banks must invest heavily in systems, resilience, monitoring — but the ROI is increasingly in avoiding loss rather than only in new growth.
3. Competitive and regulatory environment
- The Treasury Select Committee noted that UK major banks had accumulated over 33 days’ worth of unplanned outages in two years. (Reuters)
- Regulators and policymakers are focusing more on operational resilience, customer redress and digital reliability: banks may face higher regulatory scrutiny if outages become frequent.
- From a competition perspective, banks with strong digital platforms and reliable services (including neobanks) gain an edge: the switching data show small banks or building societies gaining from large-bank failures.
4. Implications for customers
- For customers: these cases emphasise the importance of service reliability when evaluating banks — not just interest rates or perks.
- If your bank suffers a major outage and you experience actual losses (missed payments, fines from failed transfers, etc), you may have a claim for compensation or redress; both Barclays and Santander have made public commitments in this area.
- Switching current account providers is now easier than ever (via CASS) and many customers use service reliability as a decision driver.
Final Thoughts
The cases of Barclays and Santander illustrate a shift: operational glitches that might previously have been seen as short-term nuisances are now material business risks for banks. Loss of trust, account attrition and reputational damage all follow when customers cannot access their money or services.
For Barclays and Santander:
- The immediate numbers are stark: tens of thousands of lost accounts in a quarter.
- The longer-term challenge is rebuilding trust, ensuring no repeat outages, and retaining customers who may now view switching banks as low-hassle.
- For the industry, the lesson is clear: digital reliability and customer experience are now core competitive fields – not just “nice-to-have.”