Goodwin’s IT policy returns to hurt RBS

In the early days of the financial crisis, extracting apologies from bankers was all but impossible; now they can’t stop saying sorry.

After millions of customers were denied access to their money on one of the busiest shopping days of the year, Royal Bank of Scotland took to Twitter on Monday with a series of apologetic tweets.

Blaming unspecified "technical issues" for locking millions of NatWest, RBS and Ulster Bank customers out of their accounts, the bank swiftly promised that those left out of pocket would be compensated.

Yesterday’s personal apology from RBS chief executive Ross McEwan was also tweeted in full by the bank to its customers. And what an apology it was – branding the systems failure unacceptable, the RBS boss blamed it on “decades” of failure by the bank to invest properly in its IT systems.

“We have to do better,” McEwan pledged, saying the bank was investing heavily in building systems that can be relied upon by customers. He promised to unveil plans in the new year “for making RBS the bank that our customers and the UK need it to be”.

Quite how many of its customers will be prepared to wait for that is another matter, however. This is just the latest in a series of IT glitches to hit the bailed-out bank – in June last year, millions of customers were unable to access their accounts for days, or in the case of unlucky Ulster Bank customers, weeks.

The system meltdown cost RBS £175 million in compensation and other expenses, as well as costing the bonus of then chief executive Stephen Hester.

The regulators are still investigating the 2012 IT fiasco and could yet land the bank with a hefty fine.

The glitch this time was less serious, lasting only a few hours on Monday, although customers were still complaining of problems on Tuesday, with many reporting money missing from their accounts.

The timing of the systems crash, on the evening of Cyber Monday, one of the busiest online shopping days of the year, is a disaster for the bank, as were the social media posts from thousands of angry customers. During the three hours the systems were down, an estimated 250,000 customers an hour were trying to withdraw money from cash points, with many more shopping online at home or attempting to pay in supermarkets, bars or restaurants.

McEwan, who took over from Hester in October, is getting used to the feel of sackcloth and ashes. Just a week ago, he was apologising for RBS’s poor treatment of its small business customers amid as yet unproven claims that the state-backed bank deliberately drove companies to the wall in pursuit of profit.

He’s certainly had more practice saying sorry than his infamous predecessor-but-one, Fred “the Shred” Goodwin. Goodwin apologised in the end, for what it was worth, and he certainly owes McEwan an apology now, as much of the blame for the bank’s creaking IT systems can be laid firmly at his feet.

After the takeover of NatWest in 2000, and of ABN Amro in 2005, RBS patched together the IT systems of the different banks, rather than investing in an upgraded network for the hugely enlarged business. But audacious takeover deals were more Goodwin’s style, not the basics of ensuring the bank might actually work.

That failure will cost RBS dear – as well as the compensation bills, possible fines and potential loss of customers, analysts reckon the bank now needs to spend well over £1 billion to update its creaking technology.

Fiona Walsh is business editor of theguardian.com