Unhappy NAB customers Robert Lancaster and partner Kirrily try unsuccessfully to withdraw money in Brisbane on Sunday. Picture: Jack Tran Source: The Australian
A NATIONAL Australia Bank staffer with access to several mainframe systems caused one of Australian banking's biggest bungles.
NAB refuses to give a detailed technical explanation as to what went wrong and denies claims its mainframe system had anything to do with the problems.
The bank's technology issues last week affected not only other major and regional banks, and their customers; retailers, such as Woolworths, were also caught in the dragnet. Some people realised they could not pay the rent or buy groceries with no salary to draw on. The affected banks have been forced to roster additional customer service agents to handle queries that have been flooding in since the problem struck on Thursday.
The banks had to offer customers temporary overdrafts without charging interest or fees, change payment dates for loan repayments and forfeit penalty fees on overdue mortgage payments or overdrawn accounts.
NAB conducts batch processing on behalf of other banks each day. When completed, a file, containing a detailed transaction history, is generated, which is then sent to the banks by NAB at the end of the day.
On early Thursday morning, IT departments at financial institutions such as Commonwealth Bank, Westpac, ANZ, HSBC, Citibank and Bank of Queensland went on high alert when they did not receive the files.
NAB told them that "technical issues" had hampered the delivery of the files. The widespread ramifications were immediately clear to all stakeholders: the inability to reconcile accounts would be a disaster.
Since the news broke, NAB has blamed a "corrupted file in the processing batch" as the cause of its nightmares.
However, it apparently was not a "file" itself that was the problem. Instead, it appears that someone from NAB's IT department who had access to the system inadvertently uploaded a file that "corrupted" the system.
NAB spokesman George Wright described this as a "fair" statement as he tried to explain exactly what went wrong.
Mr Wright said he did not have technical details of what happened, but ruled out sabotage, hacking or a virus attack. He confirmed the corrupted file itself did not contain any customer data. The "file" was actually software code containing instructions on how systems should operate in the batch processing cycle.
The issue had nothing to do with NAB's mainframes which, he stressed, did not crash.
He rejected claims a botched mainframe upgrade was the culprit and declined to comment on reports that a recommendation to spend $100 million on back-up IT measures was rejected in 2008.
"We spent $900m on IT infrastructure last year alone," he said.
Mr Wright said the problem also had nothing to do with NAB's $1 billion core banking platform upgrade, dubbed NextGen.
He said the problems, such as duplicate or missing transactions, had been resolved for most customers.
NAB has vowed to compensate people left out of pocket. The bank had identified about 19,155 accounts, which had outstanding problems of duplicate or multiple transactions. But NAB's banking clients, including St George and Bank of Queensland, have had to hire extra staff to deal with problems at their end. They have also promised to waive any late fees.
A Bank of Queensland spokeswoman said the issue of compensation had not been broached. A Woolworths spokeswoman confirmed there was a delay in receiving payment from NAB for "some credit transactions but this has now been resolved".
NAB said delayed value exchanges to other banks had been processed over the weekend. "This means other banks can now begin to process any salary or other payments to their customers which may have been impacted by the processing delay," it said yesterday.
The NAB glitch forced its chief Cameron Clyne to apologise in newspaper advertisements yesterday, with NAB branches forced to stay open over the weekend.
Commonwealth, Westpac, and the others will spend this week clearing the backlog of problems.
