U.S. banks can congratulate themselves for having avoided the security and capacity problems that have recently plagued U.K. banks with Internet operations.
In the past few weeks a security crisis hit Barclays Bank, technical glitches hobbled Abbey National PLC, and fears of a system overload caused Halifax PLC to delay the opening of its Internet-only bank.
The culprit in Barclay's case was a July 29 systems upgrade made to its online banking service. July 29 was a Saturday; the following Monday seven customers called the bank's help desk to say they had inadvertently gained access to someone else's account. The bank immediately shut down the site for about four hours while it withdrew the new service and reinstated the old software.
No transactions were made in the accounts opened in error, said Jo Wright, a spokeswoman for Barclays in London.
The problem occurred whenever two customers logged on at exactly the same time. One person's login would fail, while the other person would see somebody else's account.
Barclays will not re-introduce the upgrade, which was developed in-house, until it can fix the security breach. "We need to be fully satisfied the problem won't happen again," Ms. Wright said.
Barclays had tested the software, which supported additional products and services, with 15,000 customers over six weeks. But the problem did not show up until the system was open to more than a million users, Ms. Wright said. Barclays' two-year-old online banking service has 1.2 million customers, more than any other bank in the United Kingdom.
Barclays apologized for the breach in a note posted on its Web site. The bank also has personally replied to phone calls and e-mails from concerned customers.
"People are treating it as a glitch," Ms. Wright said.
Abbey National ran into problems when its Internet bank, Cahoot, was introduced. The site went down for an hour on its launch date, June 12, and offered only limited access in subsequent days.
Potential customers logging on to the site saw only an error screen. "It was a series of technical issues, which as far as I understand, had to do with integration," said Miranda Woodley, a brand specialist for Cahoot in London. Some people were frustrated, she said.
The bank sent e-mails and made phone calls to help people reapply. "It took us about a week to sort it out," Ms. Woodley said.
During July and August, Cahoot has been up 100% of the time, Ms. Woodley said. On July 26 the Internet bank announced that it had acquired 30,000 accounts, one-fifth of its target for the year. It also said it plans to add online trading and mortgages.
Halifax's Internet bank, Intelligent Finance, has a capacity problem. It has delayed opening IF.com for more than a month as it continues to test its system's ability to handle a large number of accounts.
The bank was due to open July 14. On July 13, Jim Spowart, chief executive officer, announced that the opening would be delayed "until the resilience of its capacity management system has been tested to its complete satisfaction. We simply cannot handle the anticipated levels of customer activity."
The problem surfaced when 500 customer service employees used the system at the same time, said Jennifer Blackwood, a spokeswoman for IF.com in Edinburgh. "It slowed down occasionally," she said. "It was an intermittent problem."
Now 400 in-house developers and several software vendors are testing the Internet banking and telephone system daily. "When we announce the system, we want it to be able to cope," Ms. Blackwood said.
IF.com's telephone banking service is now scheduled to begin at the end of August and the Internet service soon after.
Hiccups in U.K. Internet banking, which were reported in Securities Industry News, a sister publication of American Banker, seem to be "rites of passage," said Nick Jones, an electronic commerce analyst at Jupiter Communications in London. The problems experienced by the U.K. banks have mostly been the result of human error, he said.
"I think it's a British disease to do Web site infrastructure on the cheap," Mr. Jones said. "That's the classic difference between the U.K. and the U.S. Internet companies. U.S. companies have experience scaling sites. We're still a bit behind here."
