What caught my eye this week.
Unlike some vocal Monevator readers, I’m nearly all-in on the cashless society.
I even have a long-running email thread with a few sceptical and long-suffering friends, where I goad them with statistics about cashless shops and restaurants, and stories about homeless people taking donations via their own QR codes.
They post counterpoints, of course. Usually something about how Great Aunt Beryl can’t use a smartphone. Or how making all payments digital will only enable the surveillance state.
That’s fair. There surely are still too many Aunt Beryls around for us to go fully cashless. And though there’s nothing much I can do about it, our privacy protections are too feeble for me to be completely comfortable with the paperless spending trails our taps and swipes leave behind us. Even if “you only need to worry if you’re doing something wrong” as the complacent always say.
Okay, but what if my wrong is my own (romantic) affair or – more sympathetically – an escape fund that I’m amassing to get away from an abusive and controlling partner, rather than a matter of public safety?
I believe there are ways around these concerns, both technological and legislative. Whether we’ll see them is another matter.
But in any event I’m not sure what we can do about Amazon going down.
Unable to connect
Yes, the vulnerability that hogged the limelight this week when the hyper-scaler’s AWS cloud service went offline was a dry run of another of my pals’ concerns.
Their Doomsday version includes EMP weapons in space that knock out the payments rails, alongside anything else with an electronic pulse. For my part I contend we’d have other problems in such a scenario that a wallet with a few tenners wouldn’t solve. Not least the tills not working!
But putting that debate to one side, according to Which:
A service outage at Amazon Web Services (AWS) […] caused widespread disruption, taking down millions of major apps and websites – including HMRC, Snapchat and Duolingo.
As the world’s largest cloud computing provider, AWS underpins many online platforms through its storage and database services.
The issue has also affected some of the UK’s biggest banks under the Lloyds Banking Group umbrella, leaving many customers unable to access mobile or online banking.
You can add Royal Bank of Scotland to the list too, according to This Is Money.
Customers of the affected banks were unable to access their apps – although I presume physical credit cards continued to work.
But then I no longer even take a credit card out of the house except on special occasions, let alone cash.
Well over 95% of my spending is done via my Apple Watch. That includes just getting around the Tube (which still feels like magic).
But I admit this week’s outage gave my cashless evangelism pause.
Restore from backup
The immediate fix is to have more than one bank account – with the second bank being one that works with a different cloud provider.
From This Is Money:
The main way to protect yourself if your bank goes down in an outage is to have a second bank account with access to online banking.
Though Lloyds and the banks across its brand were down, other banks for example First Direct, Monzo, Starling and Chase were not affected.
You don’t need to keep a huge balance in it but it should have enough to cover you if you need to go to the shop and for essentials.
This is good advice, similar to why I suggest spreading your assets between different platforms in case of failure, even if you expect to ultimately be made whole again through regulatory protections.
That’s because there’s a hassle factor if all your investments are inaccessible in the meantime. Hence redundancy protects you from more than just loss.
Same with spending money, if all your money is only accessible via one bank for a time.
Registry not found
The snag: who knows which bank uses what cloud service?
Perhaps there should be a public cloud register, in the same way that we can consult a Bank of England registry to show which banks belong to the same group for FSCS purposes?
You could then pick one bank that works with Amazon, and another than runs off Google or Microsoft. (At least until they switch…)
I can’t find anything like that in existence. Just lots of stories about cloud providers winning bank business, as well as this ominous piece from a cloud trade publication from 2022:
Prudential Regulation Authority concerned over banks’ reliance on cloud
The Prudential Regulation Authority (PRA), responsible for regulating UK banks, credit unions, and insurers, plans to increase its scrutiny of major cloud computing providers.
Concerns stem from the growing reliance the banking sector has on the Big Three to maintain its systems and the threat an outage or hack could pose.
As a result, the PRA is looking into ways to access more data from Amazon, Microsoft, and Google, particularly in relation to the operation resilience of their services, the Financial Times reports.
In recent years, Amazon Web Services has struck deals with Barclays and HSBC. Meanwhile, Microsoft Azure and Google Cloud have both managed to partner with Lloyds Banking Group.
Whilst UK banks’ use of cloud computing is covered by the PRA, there are growing worries over the scale of disruption that multiple services failing in unison could cause.
Time to address those worries, I’d say. At the least with a public registry.
Of course there’s nothing in the laws of physics that says all the cloud providers can’t go down at the same time. So having two bank accounts isn’t failsafe.
Ironically, given my stance, I’ve always kept some cash hidden at home. Though that is more in case the credit card payment rails fell over for a bit – and also because some tradespeople will always prefer cash.
Sleep mode
These episodes mostly show us how reliant we are on the cloud as a society, given such services are dominated by just three companies – and hence how protections and failsafes must be a national affair as much as a personal one.
I mean, some people couldn’t even get to sleep due to the Amazon outage.
According to the Guardian:
Customers of Eight Sleep – a smart bed company that connects to the internet to control the temperature and incline of a person’s bed – found they were unable to adjust the bed or the temperature of the bed during the outage because they were unable to connect to the bed in their phone app.
That takes the old adage about having backups so you can sleep at night to another level!
Have a great weekend.
From Monevator
What to do about extreme US valuations – Monevator [Members]
The tax-free Lump Sum Allowance conundrum – Monevator
From the archive-ator: Don’t currency hedge your equity portfolio – Monevator
News
UK inflation expectedly steady at 3.8% – Sky
Highest UK government borrowing in September for five years… – BBC
…but household savings at a record £2.2 trillion, too – This Is Money
New regulations for Collective Defined Contribution (CDC) schemes – GOV.UK
Real living wage will rise to at least £13.45 an hour – MoneySavingExpert
Housing market slows on fears of higher property taxes – This Is Money
University tuition fees in England to rise annually with inflation from 2026 – BBC
Surge in savings lost to investment scams – Guardian
UK elderly population at record high – Standard
Why the ultra-rich are giving up on luxury assets [Paywall] – Economist
Yet another round of Budget speculation mini-special
Rachel Reeves said to consider raising income tax rates… – Guardian
…and NI hikes for professionals such as lawyers and accountants – BBC
Reeves looks at ‘minimum UK shareholding’ in ISA reform – MoneyWeek
Steve Webb: pension tax-free cash unlikely to be slashed – This Is Money
Products and services
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HSBC and Barclays cut mortgage rates as inflation stalls – This Is Money
Zopa’s new Biscuit account adds 4.75% easy access savings – Be Clever With Your Cash
Should you choose a bank or building society for your mortgage? – Which
Get up to £200 cashback when you open or switch to an Interactive Investor SIPP. Terms and fees apply, affiliate link. – Interactive Investor
The best inflation-beating savings rates – This Is Money
Are banking hubs the answer to disappearing branches? – Which
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Can you get a mortgage to buy a house without a job? – This Is Money
Santander: a £100 Amazon voucher and £20 cashback – Be Clever With Your Cash
Homes for sale with a grand design, in pictures – Guardian
Comment and opinion
The challenge of diversification – Verdad
Are you a cat or a dog? – 3652 Days
Nine truths about investment returns – White Coat Investor
What can Estonia’s flat-rate tax regime teach Britain? [Paywall] – Times
Reasons not to own gold – A Wealth of Common Sense
Why this retiree is spending their retirement on a cruise ship – Independent
Pay attention to the storyteller – A Teachable Moment
War and payment innovation: paper currency in Britain – The Bank of England
Can machine learning predict factor returns? [Research, nerdy] – Alpha Architect
Economic growth mini-special
Populism and economic prosperity – Mainly Macro
Britain’s consumers are now a drag on economic growth – David Smith
UK pension funds and insurers partner to ‘help drive growth’ – Yahoo Finance
To encourage growth, R&D tax relief needs a total revamp – Observer
The secrets to sustainable growth and wealth – Known Unknowns
Naughty corner: Active antics
A down-to-earth discussion about AI and investing [Podcast] – Flyover Stocks via Spotify
The hidden costs of leveraged ETFs – Basis Pointing
Why everyone is trying to sell you private assets right now [Paywall] – FT
Up as much as 1,000%, Beyond Meat is the new hot meme stock – Sherwood
It has paid to literally bet against Trump – Bloomberg
The Degenerate Economy index is up 130% – Forbes
The bond funds the pros are buying and why [Affiliate Link] – Interactive Investor
Momentum != moat – Kyle Harrison
Kindle book bargains
The Art of Uncertainty by David Spiegelhalter – £0.99 on Kindle
Narconomics: How to Run a Drug Cartel by Tom Wainwright – £0.99 on Kindle
Great Britain? by Torsten Bell – £0.99 on Kindle
Supremacy: AI, ChatGPT by Pammy Olson – £0.99 on Kindle
Or pick up one of the all-time great investing classics – Monevator shop
Environmental factors
If people knew what goes into cheap meat, the love affair would be over – Guardian
Dozens of beaches in South Wales plagued by plastic discs – BBC
Bonobos: can we save the last of the ‘hippy apes’? – Guardian
North Atlantic right whale population is slowly increasing – Guardian
Robot overlord roundup
Slop is winning – The Atlantic [h/t Abnormal Returns]
Is AI enabling a golden age of stupidity? – Guardian
OpenAI’s new browser Atlas should come with a warning sticker – Anil Dash
Google hails quantum computing breakthrough – Guardian
Study shows AI assistants misrepresent news content 45% of the time – BBC
More on the – um – courageous business models of current AI players – Ed Zitron
Was this the ‘Karpathy Moment’ for the AI industry? – Value and Opportunity
Bubble, bubble, toil and trouble – Don’t Worry about the Vase
Follow the AI debate on this thread curated by Monevator commenter Delta Hedge.
Brexit omertà breaks mini-special
BOE boss: Brexit is a negative for the economy for ‘foreseeable future’… – Sky
…Chancellor also admits that Brexit dealt long-term damage to economy – BBC
…but Telegraph’s deep dive on UK ‘losing its way’ still admits zip [Paywall] – Telegraph
Nothing else worked, so Starmer and Reeves are now telling the truth about Brexit – Guardian
Not at the dinner table
Rare earth spat shows Trump already lost his trade war with China – Wealth of Nations
Trump pardons convicted Binance founder Changpeng Zhao – CNBC
Madagascan politics – Garden of Forking Paths
The US journalists quitting rather than self-censoring – Politico
Former first lady staffers in tears, donors blush: Trump’s Mar-a-White House – The Bulwark
How dozens of Trump donors have benefited from his second term [Paywall] – FT
Off our beat
The £5.30 orange juice that tells us why supermarket prices are sky high – BBC
The hidden fatigue of switching tasks – Art of Manliness
Enshittification: yes everything online sucks says author- Ars Technica
The world of Settlers of Catan is coming to Netflix – Tudum
Why luxury travellers are paying to work for their dinner – BBC
The threat of nuclear apocalypse never went away – The Atlantic
On the edge: A week in the NHS… – Sam Freedman
…and why medical students are choosing Bulgaria over UK – BBC
Argentina could be a superpower – Uncharted Territories
And finally…
“The Story is what makes each deal unique. Understanding The Story is what gives me the edge.”
– Guy Hands, The Dealmaker: Lessons from a Life in Private Equity
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For an example of what happens when internet access is totally lost you should read https://www.theguardian.com/news/2025/sep/30/tonga-pacific-island-internet-underwater-cables-volcanic-eruption
Cash remains my preference. I worked on ecash in the 1990s (Mondex and MultOS) and the discussions about privacy have stuck with me ever since.
I was chatting with a tech lead at HSBC a while back, and he mentioned they load-balance payments systems across both Amazon (AWS) and Microsoft (Azure). It’s a belt-and-braces approach that makes simultaneous outages vanishingly unlikely, but it’s also eye-wateringly expensive. Many banks and other institutions, especially the smaller ones, simply won’t go that far so some cash under the mattress it is!
Reasons to reject the “you only need to worry if you’re doing something wrong” argument: you don’t know what in the future might be deemed ‘wrong’, nor who might be in a position to decide it.
I don’t think a registry would help. Banks (and Building Societies) run dozens of different independent systems. What you interested in? Apps, debit card payments, credit card payments, ATMs, telephone banking, branch systems, paper statements, online statements, credit checking…? I could go on. Any one of those might use any one (or more) of the cloud providers.
The onus is on the banks to provide resilient services – especially for key capabilities – using whatever strategies are appropriate. Using cloud providers is generally a way to improve resilience, compared to trying to manage everything in house. But it does introduce concentration risk.
I believe the regulators have been working with the banks for some time to address concerns in this space, but it’s extremely difficult to avoid single points of failure anywhere within a series of very complicated technology stacks.
Invariant has hit the nail on the head, unfortunately.
Even a question like “does this bank use AWS?” can be an incredibly difficult question to answer at a group level. Even if they don’t want to use a particular cloud provider, it doesn’t mean that someone hasn’t. Authorised vs unauthorised cloud is a massive debate and challenge on its own.
The EU has been working on this via DORA, which at its core posits (quite correctly) that a bank is only as resilient as the cloud providers it uses. The UK has been making steps in this direction as well but IMO we are lagging behind somewhat.
There’s a further challenge in that you need to have quite some clout to compel a provider like AWS / Azure / Google to open its doors and show a customer or regulator what’s going on behind the scenes.
“some tradespeople will always prefer cash.” Can’t think why.
But how much cash? I wondered whether a decent guideline would be to keep cash about equal to the sum of the current balances on our credit cards (not our stoozing cards, just the cards we use for monthly expenditure). Would that be a bit excessive? It would approximate, I suppose, to about 56 days of such expenditure. Too high?
Maybe, instead, the sum of our average monthly payments on those cards – so roughly half as much. Still sounds a bit high. Does anyone have advice to offer?
> Well over 95% of my spending is done via my Apple Watch.
Shouldn’t it be Apple’s backend transmission you should be worried about, total full-spectrum 360 degree single point of failure.
As for the bed people, the rule is simple. If it depends on an app, or the cloud, then if it’s a nice to have, fine. If it’s an essential, anything that depends on an app has a service life of five years tops. I avoid hardware that uses an app, primarily because I don’t like it grassing me up, but secondly because I learned the ‘this service will be turned of, and you can suck lemons’ with efergy engage, and I’m not going to be had by that again. Their service, their rules, your impending loss sooner or later.
Convenience comes at a price that’s not listed on the sticker. Cloud-enabled beds, FFS!
as for tills going down …
I remember supermarket staff training back in my student days … where we were taught that if the tills went down – we should ask each customer to estimate the value of their trolley … that the vast majority of people would give a reasonable estimate … and it was the best way to keep (cash) sales moving!
And of course the report on the Lancaster 2015 flood highlighted that there was food in the shops – but people didn’t have cash to buy it (and the tills were down) !
https://www.theblackoutreport.co.uk/2019/12/11/lancaster-floods-living-without-electricity/
@ermine Apple Pay transactions (at a payment terminal) don’t go through an Apple backend, they go straight to Mastercard or Visa.
Setting it up in the first place does rely on an Apple backend though.
We’ve been having discussions about this topic at work this week – my employer is concerned about our exposure to any future AWS outage. Yes, you can go multi-cloud and host on both AWS and Azure/Google. However, for most complex web systems you tend to be dependent on many third-party systems – and these have their own dependences. Essentially, it’s really difficult to be entirely resilient.
Count me as one who didn’t get to sleep due to the outage – it all kicked off just before 1am local time! Then related issues and cleanup took through to 3am the following day.
I assume we can thank Apple for pioneering NFC payment with Google following fast behind and then all the terminal providers getting onboard the Apple train. Even here in the US where it still takes 1-2 days to transfer funds between bank accounts, I at least no longer need to carry physical cards anywhere.
Many thanks @TI for the as ever excellent links and for the effort and the time which has gone into them.
[And thank you also for the AI comment thread h/t 😉 ]
Uncharted Territories: there are 4 types of economies: developed, developing, Japan and Argentina!
@Dearieme. That’s far too much cash in my view, if things get really bad with persistent outages, you’ll have nowhere to spend it anyway.
I think I might get equally concerned by the loss of GPS. Not so much for the loss of navigation, more from the loss of the timing signals which I am told are used everywhere.
In this week’s FT Economics Show podcast, the economist Tim Leunig is talking about routes to boosting the UK economy. One of his proposals is to all but eliminate notes and coins in the economy, primarily to prevent tax fraud from small businesses not declaring cash receipts. I don’t know him, and his tone of voice makes him sound deliberately provocative, but I think he is being serious! He does at least contemplate using some of the savings to provide bank accounts for folks who don’t currently have one.
An interesting point for me on this oligopoly is that these are the three companies heavily implicated in AI (over?)investment. Should those bets turn sour then it’s not going to be difficult to raise rates on their cloud access to cover them. It appears there is no alternative.
Perhaps you could research how the many and varied kinds of payment rails work and write an article of it, that would be quite interesting and too many people don’t understand which parties are involved. The duopoly of credit card networks, Visa and Mastercard, which are required for authorisations of any POS card transaction, apply both to physical credit cards and your Apple Wallet virtualised version of the same. And were not affected by the AWS outage afaik. Some individual Issuer Banks (eg Lloyds??) connection to the card networks might have been impacted.
Ultimately physical cash will die out, it is only a question of how fast, and how much noise the nay-sayers will make. But ultimately we need more robustness in the electronic system. Hopefully we can move on from the blockchain cul-de-sac. The answer is not BTC but it might be a digital currency managed by a central bank.
Lastly, just on the accuracy front, Bank of Scotland (HBOS) is not the Royal Bank of Scotland (RBS now branded Nat West). HBOS might have been impacted as it is part of LBG, but Nat West was not (despite being a big AWS customer, their systems still mainly run on their own IBM mainframes).
As someone who worked in IT, this AWS outage was quite funny as it brought back the meetings I would attend about DR and resilience.
In my early career, my employer wanted fail safe operation and that included when power/networks were down. We could operate as we had offline operating capability if anything happened. (It added an overhead on cost but not much at that point in time). There were incidents where my employer kept operational where others had to close up shop, the management revelled when this occurred.(They made revenue, while others were not)
I did have meetings with banks and demos of their DR IT solutions when working on certain projects. (These were all before cloud platforms became the norm).
As years progressed, employer senior management started cutting funding for resilience due to cost and the fact that % of outages was so low they felt is was not impactful on brand/company image.
IT design then creeped to outsourced platforms, then to cloud. It became all about the bottom line cost. Now as others have said IT systems are so complex now, you have no idea who is using what, never mind which outsourced platform is using which cloud provider, then add any subcontracted functions that the outsourced platform use that ultimately trip the platform up.
Keeping a register would be hard as keeping up to date would be a nightmare. Also it just adds to the hacker dream of being able to pick off companies once they have infiltrated the service platform (NOTE: recent retail cyber attacks….)
My last job was just serving as an interface between the employer(client) and the outsource IT platform provider. The IT platform provider had no idea what ran on what or how things were operating and how interdependent they were until something went wrong. I would ask probing questions with the response being shoulder shrugs and a ‘We will have to take that away to get an answer’. They had high staff turnover to the extent that no expert knowledge was held in the company and everyone just depended on helpdesks to find out (any outage history) or wait for a failure to find out where the points of failure existed.
Just because your main platform isn’t on AWS does not mean that you haven’t got a AWS dependency through a 3rd party link… You only find out when it all goes down and then you have to review and amend or determine your operating rules and service levels accordingly.
Personally: I keep some cash. I have two current accounts with different unlinked banks and two credit cards, again via different providers to hopefully have something that works if the SHTF.
I am just glad that people are now starting to talk outages and the consequences of them. We are getting so dependent on 3 providers, its terrifying what the results of this could be. It’s the same with power, just look at the incident in Spain.
I am like ermine – I accept certain things that are apps/online but others I refuse to buy. I don’t want essential items that need an app to control it via cloud services.
Those who don’t use smartphones are underrepresented online, so people tend to ignore this population. Think of the government’s plans for Digital ID as an example.
As one such “Great Aunt Beryl”, I had little direct impact from this outage.
Technology makes us more vulnerable in many ways.
Loved the Kyle Harrison Momentum ! = Moat piece in the links.
Less loved Tom Nichols’ ‘the Atlantic’ piece in the links covering Kathryn Bigalow’s “A House of Dynamite”. This review adds some needed balance:
https://open.substack.com/pub/almauroni/p/the-horrible-shallow-preachy-nuclear
A review of the review of the House of Dynamite film reviewed in the Atlantic piece in the links 😉 :
https://open.substack.com/pub/almauroni/p/the-wapos-coverage-of-a-house-of