Backlog processing goes on - FT.com Royal Bank of Scotland's decision to consider legal proceedings against US software company CA Technologies caps off a miserable week for the taxpayer-owned banking group. What started as a software glitch at the bank's IT unit in Edinburgh ended in millions of customers being frozen out of their bank accounts for almost a week and a potential bill that could run to hundreds of millions of pounds. The glitch appeared on Tuesday night last week following a minor upgrade on its software system as the bank was processing account transactions. Debits and credits were not being carried out as usual. The problem lurked in RBS's CA-7 batch processing software, according to people familiar with the situation. RBS uses CA-7, produced by CA Technologies, to process routine jobs, such as debiting and crediting accounts. While the software failure was resolved immediately, the bank was left with a larger problem: it did not know how many transactions had been processed. It had to process them all again. RBS feared that attempting to process the entire batch of transactions at once would crash their system. Each transaction thus had to be processed manually, creating the backlog which paralysed customer accounts. "For them not to have a contingency plan and revert to how it was beforehand is pretty shocking," says one IT analyst. RBS maintained the standard order of its transaction process. Transactions involving 3.5m RBS current account customers were processed first. Then came NatWest and its 11.5m users. Ulster Bank transactions were processed last, meaning that some of Ulster's 1.9m customers were still without access to a fully functioning current account on Tuesday. While RBS battled to clear the backlog, new transactions poured in. It was only the arrival of the weekend that allowed transactions involving RBS and NatWest to be completed by Tuesday. RBS said on Tuesday that it expects all transactions to have been processed by Monday. "Generally speaking, if you're doing a major upgrade, you'll do it at the quietest period - but it sounds like this wasn't a major upgrade," says Jonathan Imlah, an IT analyst at Collins Stewart. Big banks can update software dozens of times a day, testing the new software version thoroughly before its introduction, and reversing the update if there are issues. CA Technologies declined to comment on whether their software was at fault. Although the bank's decision to extend opening hours and open on Sunday was applauded, RBS's response to the software failure has been criticised by sector analysts. "There's inevitable speculation that it's down to cost-cutting and off-shoring," says one analyst. The bank had come under fire from Unite, the union which represents staff at RBS, for laying off 30,000 workers, as well as the outsourcing of various functions. Stephen Hester, RBS chief executive , however, denied that the glitch was caused by recent job cuts or outsourcing. Mr Hester said that the bank's IT centre had "nothing to do with overseas." An outsourced IT provider could make the investigation into what went wrong easier, according to some analysts. "If it's an external provider then it's easy to root out the issue," says Milan Radia, an IT analyst at Jefferies.