People sometimes don’t appreciate just how reliant they are on the smooth running of the banking system. We have become accustomed to being able to use our debit cards to purchase goods in stores and online at any time we want and expect to be able to transfer money at the touch of a button via online and mobile banking. It’s quite common for all banks to suffer occasional technical outages but these tend to be short-lived and often only affect one of the many channels that banks offer. Occasionally, however, something more drastic goes wrong, which may have the potential to cause all the bank’s services to grind to a painful halt.
When a catastrophic technical failure hits a bank the impact upon customers can range from minor inconvenience to devastation. If we take a scenario where a bank’s main money transmission systems have fallen over, some of the consequences can include a delay in wages, benefits, or other income payments being processed, as well as an inability to keep track of account balances and, in some cases, an inability to access or move money.
We rely on being able to access our money to pay bills, keep our families fed, commute to work and to finance a million other things, both big and small. In an era where complete banking failures have become more common, many people have already started to make contingency plans. However, it’s worth considering how we can prevent total household meltdown if a more short-term technical failure hits our primary bank.
Keep a household emergency fund:
Worries about banks should not lead us to revert to stashing our savings under a mattress. However, there is merit in keeping a small reserve fund. This cash reserve will help you to buy essentials (such as groceries) if you were suddenly to lose your debit card or if your bank is temporarily unavailable.
Have a savings contingency fund and spread it across different banks:
Financial planners generally recommend that people hold back around three months’ worth of income in an instant access savings account, which can act as your savings contingency fund. Clearly, this may not be viable for everyone but the principal is sound – keep some money back in a savings account. Having all your eggs in one basket, however, can lead to a yolky mess if that basket develops a hole. With regards your hard accumulated savings funds, it’s often sensible to split them across a couple of banks. That means that if one bank suffers a problem, you should still be able to access funds from the other bank.
Have a credit card that’s with a different bank than your current/checking account:
Care needs to be exercised in relation to credit cards but, if used properly, they can be useful. Clearly, most of us usually use either a debit card or cash to make purchases but if your debit card isn’t working and you’re unable to get access to your current account money, then being able to temporarily revert to paying by credit card could be a life-saver.
Have food in the freezer and tins:
In a worst case scenario, where you are unable to access your money for a few days, those people who are able to fall back upon reserves of food are affected less than those who suddenly find that the cupboard is bare. Most families should be able make do with bits and pieces meals for a day or two by using up supplies that have been taking up room in the freezer or in cupboards.
Switch to monthly payments of electricity and gas if you can afford to:
It is usually low income households that are worst affected when a bank’s technical outage leads to a temporary inability to access cash. They are less likely to have access to alternative sources of money and are more likely to be living on a week to week basis in terms of their household budgeting. They are also much more likely to still be reliant on electricity and gas meters that require regular ad hoc payments to retain a supply of lighting and heating and being without either of these commodities is traumatic, especially for households with children. Where it can be afforded, paying by monthly direct debit is a better way of minimising the risk of being cut off.
Where a major bank technical failure occurs, you can be sure that your bank will be doing everything humanely possible to get their electronic systems back up and running again. However, it is an inevitable consequence of our 21st century reliance on technology that major inconvenience will ensue if or when core databases, servers or other computer systems grind to a halt.