A weekend of banking IT woes – BNY Mellon and HSBC under pressure
- Summary:
- It's been a tough weekend for BNY Mellon and HSBC, as both banks scrambled to fix IT problems that severely impacted customers.
As I noted last week, in recent years the financial sector has consistently proven how unstable many of its systems are, with failures that regularly draw the attention of regulators and leave their customers without access to their funds.
Some of the most recent examples in the UK include the Co-operative Bank, which has said that its IT systems are so unstable that it doesn't have the proven capability to recover from a significant outage, and Natwest, which left customers outraged after a glitch meant that its customers couldn't withdraw their money.
The latter example resulted in a multi-million pound fine by the Financial Services Authority and forced Natwest to increase its investment in its IT systems by £750 million.
Last week we wrote about how one of the world's largest custodian banks couldn't accurately relay net asset values (prices) to funds following a software glitch. BNY Mellon had to admit that the problem associated with its InvestOne Platform, which is outsourced to SunGard, meant that it may have calculated inaccurate prices.
This would have led mutual funds and exchange traded funds reporting these inaccurate prices during the high volume trading conditions last week, following the instability caused by China's 'black monday'.
After days of trying to fix the problem, BNY Mellon's chief executive Gerald Hassell said yesterday that the bank was still working to fix the issue and apologised for the disruption the failure caused. Hassell explained that the issue was the result of an operating system change, carried out by SunGard, on the US instance of the InvestOne platform.
However, this corrupted both the production environment and SunGard's back-up environment, which prevented any sort of failover and extended the recovery time. BNY Mellon still does not know the root cause of the issue.
Hassell said:
I’d like to begin by saying how much we appreciate your patience and support as you’ve worked with us throughout this difficult week. We deeply regret any disruption to your firms, your funds, your investors and all of you.
We recognize the burdens placed on you to move to -- and rely upon -- alternative pricing mechanisms … and to interact with your respective fund committees and boards to approve those protocols.
We also fully recognize the importance of our role and the importance of mutual fund and ETF products to the market and investors, particularly during a time of market volatility. Our focus from the outset has been on working closely with SunGard to restore their platform to improve reliability and performance. It has taken far longer than any of us would have expected.
The failure hit 66 of the bank's fund accounting clients and 1,200 fund structures. BNY Mellon has put in place a business continuity team and created “war rooms” that brought together engineers and technical experts from SunGard, BNY Mellon, Oracle, IBM and others from around the world to fix the problem.
It said that it had completed system-generated prices for the affected clients for Monday last week through to Thursday. It was also working on Friday's prices. Hassell said:
While we have made significant progress, we recognize we still have work to do. We are committed to providing quality service to you and your investors.
It is an absolute requirement. We are committed to doing just that.
Payday woes for HSBC customers
Meanwhile, in the UK, nearly 300,000 customers of HSBC were left without their wages over the bank holiday weekend after what appeared to be an error in a file sent to BACS – the system used across the UK to process payments.
HSBC has now said that all payments have been processed and has apologised for the inconvenienced caused. The bank tweeted:
Over 99% of payments that were delayed today have now been processed, with the remaining to be credited overnight. 1/2
— HSBC UK (@HSBC_UK) August 28, 2015
HSBC apologises again for the inconvenience caused. 2/2
— HSBC UK (@HSBC_UK) August 28, 2015
A number of customers took to Twitter over the weekend to air their complaints, after many were left struggling to get hold of their wages over the long weekend. It appears that the issue affected both customers with HSBC accounts waiting for wages and customers whose employers use HSBC for their payemtns.
@HSBC_UK I still haven't received my payments?? How much longer will it be? In desperate need of access to my wages?! — ☆Paul breakspear☆ (@paulGB963) August 31, 2015
@HSBC_UK_Help I am still waiting for my wages. I supposed to get paid on Friday. I am with TSB but my employer is with HSBC — junaid khalid (@junaidmalik333) August 30, 2015
Can either @HSBC_UK_Help or @santanderuk help and tell me why STILL NO WAGES are in my account? Absolute joke. Contacting ombudsman Tuesday
— Jo Price (@jo_pricey) August 30, 2015
@HSBC_UK_Help i still have not recieved my wages!! What is going on!?
— Becky (@beckydinham) August 30, 2015
My take
The financial services industry continues to show just how important stability in IT systems is to customers. Not a good weekend for the banks.