There’s something sadly inevitable about Royal Bank of Scotland’s most recent technical breakdown, as thousands of customers are once more denied access to their own money:

Royal Bank of Scotland has suffered another IT fiasco after admitting it could take until the weekend for customers to receive 600,000 payments that failed to enter accounts overnight.

[From RBS could take until weekend to make 600,000 missing payments after glitch]

It’s not a problem specific to RBS though, it’s an industry wide issue, mostly hidden by harassed technologists desperately trying to shore up unstable systems built out of myopic procurement policies and acquisition driven integration. The problem is that the majority of the retail payments infrastructure is built on foundations as stable as a British teenager on a booze cruise – and it’s equally as unlikely to be improved by simply throwing more money at it. After all, back in 2013, after the last major technical outage, RBS committed to spend:

£450m on top of its £2bn annual IT spend to replace the mainframe that failed and on new backup.

[From RBS Mainframe Meltdown: A year on, the fallout is still coming]

Partly the problem has been caused by bank executives with little or no understand of technology; which is not to say that technologists should ever be allowed to run banks, but simply to point out that to all intents and purposes banks today are technology companies. It’s a stunning inditement of regulators that it took the Great Crash of 2007 and 2008 for them to recognize that banking executives ought to possess some knowledge of banking before being allowed to take charge of our cash, but it’s a nagging concern that they don’t require technical expertise among the executive officers of our leading financial institutions.

Unfortunately, while it’s easy to sit on the sidelines and poke sticks into the frenzied ant nests of struggling fintech departments, as politicians and journalists with even less understanding of bits and bytes than the average bank executive are wont to do, it’s entirely another thing to fix the problem. The reality is that retail banking is built on innumerable legacy systems, many of them older than the people who run the banks, integrated together in ways that defy rational understanding or intelligent analysis. The people who know how to run these systems are dying of old age exacerbated, no doubt, by the stress of trying to keep these steam-powered juggernauts going.

However, there may be an answer. Currently we’re seeing an explosion of interest in mobile banking and payments solutions, backed up by tokenization – the replacement of standard card numbers by aliases that can be used only in strictly limited environments. One unintended side-effect of this is to create a parallel retail payments solution, but one that’s built on modern technology, which is designed for adaptation and upgrade, which operates in real-time not in an antiquated batch mode, and which can be maintained by people who are young enough not to know what a mainframe is, let alone have the inclination to go near one.

Of course, this won’t fix the problems overnight – retail banking systems resemble congealed spaghetti, and merely freeing one strand isn’t going to solve everything instantaneously, but it does at least provide a starting point. The problem is that the silo mentality that created these issues in the first place is failing to recognize the possibilities. Yes, mobile payments systems are a great way to drive through new business, but perhaps the real opportunity is for banks to use them to bypass the failing and incredibly expensive legacy system nightmare.

Instead, banks are outsourcing their core business activities to third-parties who are building parallel payments infrastructures – infrastructures that are far more stable and far less likely to break under load. Who would you rather rely on for reliable payment services – Apple or Google or your current bank, resting its withered laurels on an aged and creaking set of systems? Well, we may find out, and soon unless banks seize the opportunity.

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