When does STP cost more than it saves?

We hardly ever question the benefits of STP. And for the most part, STP is really a smart move. It saves on errors, manpower, time and increases profits. What's there not to like about it?

Well, you already know that's a trick question on my part because I'm going to answer it myself. STP can become a liability rather than an asset when we become too complacent about the activities the STP enablers & systems perform. Take the case of Großansicht des Bildes mit der Bildunterschrift (KfW). The organization's name may even still be in your short term memory. Of course it is! KFW is the bank that handed over 350 million euros to bankrupt Lehman Brothers and got nothing in exchange a few months ago. The automated payment went out just hours before Lehman declared itself insolvent. Lehman did not settle the swap with the equivalent in US currency, 500 million dollars, leaving KfW in the queue as a creditor.

But we needn't lose that amount of money to be reminded of the lesson. Look to Pennsylvania man who withdrew more than $175,000 that had been mistakenly placed in his account after a bank error at FNB Bank. Had the bank used more vigilance in its STP activities and using another of its IT tools, the bank, it would have caught the mistake almost immediately. Had the bank's existing pattern recognition algorithms been used, this small error would have sidelined the deposit for manual checking & intervention. Even with this sparse information, we can surmise that this large a deposit is an extreme exception for the customer's account. Why was it not spotted sooner? I venture it was because of complacency.  

It appears to me that both KFW & FNB Bank became complacent about the activities their STP enablers & system processes . STP is a fantastic boon to the banking industry but it can also allow us to become lazy in our ever required vigilance. We. As bankers, must be ever aware of the market situation and our clients' behaviour lest we be labelled, as KFW, the "Stupidest Bank" .