Reserve Bank to monitor bank glitches

The Reserve Bank of Australia (RBA) will systematically collect information on banking outages in a bid to improve the resilience of Australia’s retail payments system.

According to assistant governor Malcolm Edey, the RBA had been monitoring significant outages “for some time”, but now planned to establish a formal reporting regime.

Edey told the Cards and Payments conference in Sydney today that “a number of high-profile outages” in recent years had disrupted payment services for “significant numbers of customers”.

A Commonwealth Bank processing issue late last month prevented customers from accessing funds via the EFTPOS payment network and ATMs of any brand for ten hours.

Westpac customers were unable to use ATM and EFTPOS services for about six hours last May, after the failure of an air-conditioning unit at the bank’s data centre in Sydney.

Meanwhile, a corrupted file in November 2010 crashed the National Australia Bank’s systems for four hours and led to five days of payment delays.

“Obviously individual banks have a strong incentive to minimise the risk of these sorts of incidents,” Edey told the conference today.

“It affects their own reputation when something goes wrong and it impairs their ability to meet the needs of their customers.

“But there is also a system-wide dimension to these problems,” he said, explaining that an outage at any one bank would also prevent customers other banks from transacting with it.

“All participants in the system, and all users of payments services, have an interest in high standards being maintained across the system as a whole, not just their own component of it.”

Edey said the RBA had been collecting information about outages on a case-by-case basis, and following up with banks as to diagnosis and remedial actions.

He said the RBA was in the “very early stage” of establishing “a more systematic reporting regime for retail outages”.

In later stages, he said the RBA would consider whether or not it should act to improve operational resilience across the Australian payments system.

The RBA flagged its intention to work with the Australian Prudential Regulation Authority (APRA) on reducing payments system outages in its Payments System Board annual report last September.

It confirmed that it would formalise outage reporting requirements last month, and called for input from the industry by March 30.

APRA's head of IT risk David Pegrem told iTnews' executive summit last month that the regulator supported RBA's calls for formal reporting of all major retail payment system incidents.

Pegrem said APRA expected high levels of availability and resilience from regulated institutions, warning that there would be “no tolerance” for service outages due to neglected legacy systems.