Ulster Bank counts the cost of catastrophic IT meltdown
Given the febrile climate of financial markets, the technical problems could not have come at a worse time for a group that has already had a chequered recent history, writes SIMON CARSWELL,Finance Correspondent
LONG LINES OF post-its and large charts of tasks to do paper the walls of the offices of the fourth floor of Ulster Bank’s head office on George’s Quay in Dublin.
The rooms named after Irish islands – Lambay, Aran and Tory – are usually used for sit-downs with top clients and meetings between managers and staff. For the past two weeks, the fourth floor has served as the base for a “war cabinet” as senior management at Ulster Bank, owned by the state-controlled British lender Royal Bank of Scotland, struggle to deal with one of the worst technical failures experienced in world banking.
“I have been with various parts of this group for 38 years and it is unprecedented in world terms – that is why the whole world is watching it and will learn from it,” said Chris Sullivan, the head of UK corporate banking at RBS who is responsible for Ulster Bank within the larger British banking group.
Just how a technical glitch triggered by a software upgrade to a computer in an office in Edinburgh can collapse the processing of a daily “batch” of 20 million transactions at one of the biggest banking groups in the world has left many scratching their heads.
It has caused upheaval in the lives of customers in Britain and Ireland, but most spectacularly for well in excess of 100,000 customers at Ulster Bank who have struggled to access their own cash and have been unable to make everyday payments since June 19th.
After getting the timing of when the problem would be fixed wrong twice since the crisis began, Ulster Bank said on Wednesday that it was confident that next week would be the last for the computer problems and that the accounts of customers at Ireland’s third largest bank would start return to some kind of normal service by Monday, July 16th.
Given the febrile climate of financial markets and customer concerns about the security of deposits amid a four-year banking crisis, the technical problems could not have come at a worse time for a group that has already had a chequered recent history.
“We did have contingency plans in place. It is fair to say that there are gaps in how that unfolded,” Ulster Bank chief executive Jim Brown told The Irish Times. “The key is getting through these issues and how we can minimise going further and how we can prevent this happening again.”
The board of RBS is finalising the terms of reference for an independent investigation into how the software upgrade at a processing centre in Fettes Row in Edinburgh culminated in knocking out the group’s processing systems for RBS and its banking subsidiaries, NatWest and Ulster Bank.
The main question to be asked by what bank staff have called a “massive drains-up investigation” is how such an IT failure could have occurred in modern banking.
“That is an understandable question and a question that we have got to ask as well,” said Sullivan.
“It is not as if we didn’t have back-up contingency for our IT systems. It is there. It is not as if it wasn’t audited, externally and internally. It is not as if we didn’t have disaster recovery plans. It is quite clear that they failed in this scenario.”
The bank denies the failures occurred because of cost or corner-cutting through restructuring or redundancies, or as a result a failure to invest money in new computer systems.
“You just wouldn’t do that,” said Sullivan. “This is a key process for the whole bank. We have seen the impact of it. We saw the impact of it across all three brands. You just would never risk that happening.”
The investigation will also look at making recommendations to ensure this doesn’t happen again.