HSBC's Digital Failure: Legacy Systems to Blame?

The recent HSBC online and mobile banking outage on February 11, 2025, has once again highlighted the fragility of legacy infrastructure in traditional banking. The disruption left customers unable to access their accounts, transfer funds, or pay bills, raising concerns about missed payments and financial commitments. This incident follows a three-day outage at Barclays, adding to a series of digital failures affecting major UK banks.

While HSBC resolved the issue within a day, the frequency of such disruptions across Lloyds, Halifax, and Barclays signals deeper systemic flaws. GlobalData’s report on HSBC’s Digital Transformation Strategies reveals that HSBC’s ICT budget exceeded $10 billion in 2023, with Barclays and Lloyds surpassing $1 billion each. Despite these investments, banks continue to struggle with digital reliability and performance.

The inability of legacy banks to deliver seamless digital experiences is becoming a growing concern. Consumers demand reliability, yet banks that pour billions into technology upgrades still face recurrent technical failures. This has resulted in dissatisfaction among customers, who increasingly turn to digital-only challengers for more stable and efficient services.

Also Read: Thousands of customers of HSBC faces outage

According to GlobalData’s Competitor Benchmarking Analytics 2024, digital-first banks like Starling Bank ranked highest in digital satisfaction and Net Promoter Score (NPS), while HSBC ranked among the lowest. These neobanks have cloud-native infrastructures that are inherently more agile, cost-effective, and resilient, ensuring faster issue resolution and an improved customer experience.

As consumer frustration with traditional banks grows, many may seek more reliable digital banking alternatives. GlobalData’s 2024 Financial Services Consumer Survey indicates that 29% of users who switched banks did so based on recommendations from family and friends, underscoring the impact of consumer sentiment on market shifts.

The failure of incumbent banks to modernize their digital strategies could lead to significant customer attrition. Legacy institutions have historically retained consumers through trust and long-term relationships, but repeated technical failures threaten to erode that trust, making way for digital challengers to capture dissatisfied customers.

To remain competitive, traditional banks must rethink their approach to digital transformation. Investments should prioritize resilience, cloud-native solutions, and customer experience to prevent further disruptions and secure their place in the future of banking. 

Also Read: Sites of major UK banks including Barclays, HSBC, Lloyds crash: Report