RBA launches probe into Oz banking outages

Australia's central bank is preparing a crackdown on operational disruptions at the country's leading banks following a series of major outages in retail payment systems and Internet banking sites. The RBA's intervention comes as Westpac warned customers that it was experiencing intermittent problems with its Web site.

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RBA launches probe into Oz banking outages

Editorial

This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community.

The latest outage at Westpac follows a stream of major operational disruptions that has afflicted all of the nation's biggest banks over the past eighteen months. Both Commonwealth Bank of Australia and Westpac have suffered repeated downtime in their online banking and payments systems as they undergo multi-year IT transformation projects to replace their legacy core banking platforms.

As an initial measure, the Reserve Bank says it intends to "formalise its requirements for the reporting of major retail payments system incidents".

The RBA says it may also insist upon additional measures, including an official investigation into the organisation of the banks' retail operations.

The central bank says it is particularly interested in uncovering the sources of vulnerability in retail operational processes, with a particular focus on existing controls, safeguards and contingencies, and plans for upgrade and enhancement of the technology supporting retail operations and "the objectives of these plans".

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Comments: (6)

A Finextra member 

Oh dear, this article only scratches the surface, I'm afraid.

How can you just point to two banks with very recent recent isues and totally ignore the hugely disruptive issues caused by NAB's poor IT management and gross under-investment over the last 18 months?

The NAB case was an absolute disgrace - the fact that they operated without any IT director or board level technological representation shows their management clearly doesn't understand what is needed to underpin today's technology-driven retail financial market - along with a cavalier attitude towards the quality fo service a customer has a right to expect.

NAB then went on to spend millions of dollars on their Break-up PR campaign, showing that had money to spend on that, but not on their internal systems! 

A little more research wouldn't go amiss, guys! 

Paul Penrose

Paul Penrose Head of Research at Finextra

Neil, you seem to have it in for NAB. Any vested interests you'd like to share? As for research, have you checked the related news items?.

A Finextra member 

Hey Paul, no vested interests in NAB, good or bad - other than an overall vested interest in better customer service from banks globally!

Have I got it in for NAB?

Given that you guys have given far more column inches to their woes than me, I find that a little puzzling!

It just seemed odd in view of the fact that Finextra carried this news in the past that they failed to mention NAB when talking about the RSA's action.

Westpac's slowed-up site is small-fry compared to major ATM and salary payment failures over many days, isn't it?

NAB's issues seem to bear a close corelation to the fact that they removed their IT management function. That's akin to firing the pilot in mid flight and then wondering why the plane crashed...

 

 

Paul Penrose

Paul Penrose Head of Research at Finextra

Neil

Glad to hear you have no axe to grind with NAB.

Omission of NAB by name in news copy a minor oversight, but inferred through reference to all of of Australia's top four banks and archive links. Westpac's woes 'amusing', since they coincided with the RBA report.

After NAB's last bout of downtime earlier this month, one of the wags on the news desk suggested that Aussia bank glitches had become the new norm, and maybe we should start reporting only glitch-free operations as news.

Elton Cane

Elton Cane Digital product delivery at News Corp Australia

Westpac being just the most recent of a litany of Aussie bank operational outages, it does make sense to highlight it in this article. But I agree that NAB has had more than its fair share of outages, which insufficient IT management structure and attention would contribute towards.

It's also worth viewing this in light of Aussie banks' IT outsourcing arrangements, which are set to increase driven mainly by the high Aussie dollar and senior management desire to keep the record profits rolling in.

Westpac in particular has made a number of recent job cuts/offshoring announcements, with some IT jobs in the mix. If you believe tips to Aussie IT press or posts from members on the Financial Services Union website, its IT department could end up losing between 1000 - 2400 FTEs in the next year or so, as current employees are forced to engage in "knowledge transfer" with existing and new offshore partners.

Westpac for the moment says that offshoring just involves 150 IT staff, and that numbers will naturally fall away as it gets closer to completing its core banking replacement with CSC's Celeriti (nee Hogan) in 2013-2014.

But I wonder whether low morale in Westpac IT could contribute towards the outages? And whether the RBA's intervention is informed by a desire to make sure offshore arrangements (and Westpac are not alone here) are managed effectively without detriment to customer service levels and system availability?

 

A Finextra member 

I agree, totally, Elton.

NAB offshored its principle IT support to India as long ago as 2007 and got rid of more last year. Some thought that a script that was blamed for a massive mainframe outage may well have been deliberate and that a disgruntled internal staffer may have caused it. I wrote about this in December 2010.

 http://lanzen.co.uk/2010/the-nab-file-was-the-crash-malicious

I can't see why any bank shoudl offshore their IT. it is far too customer centric to be given to people with no empathy for their customers.

 

 

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