Ancient systems and outsourcing to blame for RBS banking fiasco

"Ancient and creaking" banking systems, and a lack of experienced staff, were to blame for a software disaster that affected millions of customers at Natwest, Ulster Bank and RBS, experts have said.

Hundreds of thousands of people didn't have money transferred in or out of their accounts, with reports of house sales not going through and people unable to pay bail as a result. 

RBS, which owns the affected banks, said the disruption was "unacceptable" and blamed the fiasco on a failed "software system upgrade".

David Sprott, a consultant at a global company that advises major corporations and governments, blamed the outsourcing of crucial jobs at RBS: "I'm sure there are people out there who are livid as they've lost their jobs and have seen this happening.

"They're letting go of people with vast amounts of experience of the processes and the banking system. If you bring in new people the risk is enormous when something goes wrong," he said.

"This was an accident waiting to happen."

Since being bailed out in 2008, RBS has cut more than 30,000 jobs, with the Unite Union expressing "grave concerns" that this was exacerbating the problem. Software jobs at RBS have recently been advertised in Hydrabad and Bangalore.

Mr Sprott claimed the situation was made worse by very old and complex software. "RBS will have core banking systems that are ancient. They will have been patched, patched and patched for decades."

Experts have said the problems at RBS were caused by an update to a system that processes millions of updates to people's bank accounts. 

Richard Price, an IT consultant who has worked in the banking industry, said that once the error had been made it was very difficult to fix. Once the problem was spotted it would have been ‘rolled back' to undo the damage.

"It becomes less about the original error and more about how much of their data has been ‘tainted' by the bad update," he said.

"This means you need to roll back an extremely tangled and complex web of changes to all sorts of things throughout the system – and that takes time."

RBS refused to elaborate on what had gone wrong pending a "full drains-up" investigation.