The London Stock Exchange and Visa are the latest organisations to experience network outages, causing significant disruption to markets and customers.
A technical software issue was to blame for the late opening of the London Stock Exchange (LSE) on 7th June, the first major outage of its kind in seven years. Market traders were left frustrated when the stock exchange opening was delayed by one hour, with some market participants criticising the LSE’s contingency planning, given the market’s reliance on IT.
The LSE last suffered a major outage in 2011, after it moved to a new IT platform. A failed software upgrade resulted in a three and a half hour outage for the New York Stock Exchange in 2015, which earned the exchange a regulatory rebuke and USD 14 million fine. In May this year, a hardware glitch disrupted trading on the Toronto Stock Exchange in Canada for 72 minutes and eventually led to the exchange’s early closure.
The LSE outage came just days after payment card company Visa was hit by a “rare defect” in a data centre switch, which caused widespread disruption for retailers in Europe. During the 10 hour outage, some five million credit card transactions were refused, with 35% of transactions failing at peak times.
Visa’s technical problems added to the woes of UK financial services, already dealing with the reputational fallout of internet banking outages. TSB Bank’s customers suffered over a month of disruption following the migration of customer data to a new IT platform.
Customers at Tesco Bank also suffered service disruption in June, after an IT glitch brought down online and mobile banking sites. Sainsbury’s Bank also experienced problems with its payment card settlement and online banking, following a systems upgrade in late June.
The outages have raised questions about the resilience of banking and payment systems, as more and more financial transactions move online. A recent report predicted that phone banking apps will soon overtake internet banking, while more people are now thought to use phone banking apps than visit their high street bank branches.
Despite the redundancies built into IT systems, network outages continue to be prevalent. There are steps that companies can take to reduce the risks of system migration, while the residual risks are often insurable in the cyber insurance market. Retailers that are reliant on payment card services can also buy cover for disruption to third party service providers under cyber insurance.
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