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Online banking failure at Nationwide

I'm sorry to hear of the problems affecting Nationwide Building Society's customers at the moment. According to the BBC, Nationwide is suffering from a system failure which is preventing access to online accounts.

This is affecting branch counter operations as well as online banking. 

Obviously it's too early to talk about the reasons for the failure. I can't help thinking that the drive to outsource and offshore application development may be a factorIn this Computer weekly article from  last November, the cost of the IT transformation programme at Nationwide is put at £1bn. They have embarked upon an ambitious programme to move most development work to outsourced suppliers as described in the articleMy colleague Ian Mills wrote about the "economics of outsourcing" in his recent blog article; his reasoning calls the apparent cost savings of outsourcing into question.
 
As well as the dubious cost savings associated with large-scale outsourcing and offshoring; this approach can result in increased risk. I recently wrote about the increase in "technical debt" within banking institutions. Recent systems failures at LBG and Natwest appear to add weight to the arguments that banking systems are no cheaper due to outsourcing and are now carrying more risk than before. 

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