Perhaps one of the most frequent and difficult issues facing SMEs is the seemingly frequent meltdowns of both banking systems and government websites.
This is without considering the issues of cyber-attacks on companies where the FSB has recently calculated UK small firms are subject to nearly 10,000 cyber-attacks a day, with over a million small firms hit by phishing, malware attacks and payment scams.
Obviously it is in businesses’ own interests to have robust IT systems in place including cyber security, but the frustrations of IT failures are a different issue and often not of their own making since the counter parties also need to have adequate IT systems and security at their end.
Since 2018 the FCA (Financial Conduct Authority) has required banks to publish information about the number of major operational and security incidents they have experienced.
Last month a BBC investigation revealed that bank customers face an average of 10 digital banking shutdowns a month, based on the figures published so far.
The figures for the 12-month period until the end of July 2019 are not exactly comforting. The top five worst “offenders in the list (with the figures in brackets showing failures for the 3 months between 1 April and 30 June 2019) were:
Barclays 33 (4);
NatWest 25 (7);
Lloyds Bank 23 (2);
RBS 22 (7);
Santander 21 (4).
This is at a time when an estimated 6000 small bank branches have been closed, often in small town or rural locations, while, according to analysis by Close Brothers Finance, 51% of SMEs visit a bank branch at least once a week while three quarters use online banking at least once a week, with 41% using it every day.
This would suggest that the costs of IT failures to SMEs, not only in delays, frustration and cash flow issues are considerable.
But it is not only the banks that are a problem. We have lost count of the number of times businesses have reported difficulties with Government websites, from the application process for Business Rate Relief, to authorising and accessing various HMRC websites, and the online court service where last January the entire civil and criminal court IT infrastructure collapsed for several days!
Where does the problem lie for IT failures?
Is the problem with the expectations of those commissioning IT systems, who perhaps do not understand the IT capabilities and limitations? In their understandable desire to win business are the software providers and developers, themselves often SMEs, failing to tell their potential clients honestly what the limits are to the systems they want to commission? Or more pertinently what you can have for the budget.
Or is it simply that the IT skills of the Fintech and other IT provider industries are just not good enough?
We know there is a skills shortage in the IT sector generally but Fintech is supposed to be one of the UK’s most successful sectors.
UK Fintech companies received £740m from venture capital in the second quarter of 2019, almost double the amount invested during the same period last year according to the CBI (Confederation of British Industry), with Challenger Banks like Monzo among the most successful cohorts in Fintech.
Data released by Tech Nation and Dealroom for the government’s Digital Economy Council showed that British tech companies attracted more foreign investment in the past seven months than in the whole of 2018. Another endorsement.
If SMEs are to rely more and more on IT and the tech services of banks and other institutions with which they have to interact, it is perhaps time to look more closely at the services being provided and to make a concerted effort to do something to prevent so many IT failures.