The “IT glitch” which downed the systems of Royal Bank Of Scotland, Natwest and Ulster Bank at the end of last week is drawing to a close, but the blame game is just beginning. On Monday morning, BBC Business Editor, Robert Peston, claimed during an appearance on Radio 4’s Today Programme that while the problem was initially triggered by a software update that went wrong, the lasting damage was caused by the fact that RBS Group outsources most of its IT functions.

According to Peston: “In my conversations with RBS bankers, there is an implication that outsourcing contributed to the problems – though they won’t say whether this is an issue of basic competence or of the complexities of co-ordinating a rescue when a variety of parties are involved.”

This version of events is, however, challenged by RBS itself. Its spokesperson insisted that the faulty update took place on the company’s own watch and own premises, though interestingly enough this statement makes no mention as to how closely various outsourced suppliers needed to work together to tackle the knock-on effects of a pretty fundamental systems failure.

As this weekend’s events have shown us, the pivotal role that retail banks’ IT systems play in moving money about is analogous with the role of the banks themselves as engines of the economy. They are too big to fail. Yet the very importance of these systems also makes them incredibly difficult to update. In the event of something going wrong the stakes are impossibly high. And this is why the majority of banks’ retail operations continue to be run on mainframes while much of the software on which ATMs run is written in COBOL – a programming language that is now so old and understood by so few that it draws comparisons with Ancient Greek or Latin.
Peston alluded to this in his article on BBC Online, accusing RBS Group of a systemic underinvestment in IT that left it with outdated systems incapable of coping with a crisis. This does, however, strike me as a little unfair, given that this whole situation is a textbook example of why banks rub along with IT backbones that are so old they’re practically fossils. Anyone who has ever been involved in a major systems upgrade knows that these are fraught with difficulty and highly prone to failure. For most retail banks, such upgrade going wrong are too risky in the short term, too inconvenient in the medium term and too expensive to explain to shareholders in the long-term.

In terms of outsourcing, this is another matter where banks have found it necessary to balance their costs against risks. And here banks, like many other organisations in the public and private sector, have found that outsourcing IT functions has allowed them to reduce their costs while in many cases increasing the speed with which they can solve problems and drive through new projects. Outsourcing can cause serious problems is when lack of planning leads to confusion over who is responsible for what. Yet this isn’t a fault of the principle of outsourcing itself, but of poor management. Speaking as a business that regularly advises on and implements major outsourcing projects if there’s one thing we have learned is that leaving ambiguities in an agreement between a client and outsourcing partners is the fastest way to ensure it goes wrong.

The third related factor that can’t have helped RBS Group’s ability to respond to the challenge is the cost saving pressure the organisation is under as part of the terms of its government bailout. The group has shed 30,000 jobs since 2009 and reportedly made up for this reduction in headcount by outsourcing project and support work to firm in India, an issue that The Guardian explored in its coverage of the issue on Monday night. In fact trades union bosses have explicitly stated that they believed outsourcing had affected the depth and duration of the crisis. Alongside being forced to make layoffs the group will also have very likely made the decision to defer capital expenditure on new systems. Meanwhile what remains of the IT function will be preoccupied with spinning off the bank branches that RBS Group is being forced to sell to Santander, again as part of the conditions laid down when the government bailed it out.

So what have we learned from RBS Group’s ‘Computer Says No’ debacle? The truth is we won’t know definitely before the company’s own enquiry into the disaster is conducted and reported. Until then, various interested parties will continue to play the blame game and kick around the familiar footballs of “systemic underinvestment”, “poor management” and “a policy of outsourcing” in the absence of anything substantive to say. What we can assume is that with fewer people, less money but no less work, RBS Group maybe got too much to do with not enough skilled management to keep it all hanging together. And such management expertise is increasingly necessary as your work force becomes diversified through outsourcing.

Yet this doesn’t change the fact that accidents do happen, even in the fanatically risk-averse environment of your average IT department of a publicly limited company.