NAB implicates vendor in transaction woes

NAB CEO Cameron Clyne took time during the bank's annual general meeting today to explain to shareholders exactly what caused NAB's transaction woes late last month.

On 24 November, the bank's transaction system was thrown into chaos. NAB said at the time that a corrupted computer file had caused transactions to be delayed, not posted or duplicated. The problems left thousands of customers waiting for pay packets.

The AustralianIT reported that the problems had been caused by a human error during the batch processing cycle.

However, Clyne said today that a number of factors had caused the issues.

He said there had been a coding error which, combined with a software amendment carried out in 2001 to take account of the abolition of the Financial Institutions Duty, caused duplicate transactions to occur.

Yet, that wasn't the end of the story. Clyne also pulled another party into the fray, saying that a scheduled maintenance patch from an external provider hadn't been applied.

According to Clyne, that vendor has "subsequently appreciated" that the patch is "critical maintenance" and warned other customers.

A query to NAB to inquire as to which vendor had not applied the patch has not yet been answered.

Banking systems are complicated and full of legacy elements, as pointed out by IBRS analyst Jorn Bettin, who has said that the multiple layers of complexity will likely see another bank suffer a similar issue in the future.

Clyne himself warned a Senate Committee that banking systems were not to be trifled with.

"I wouldn't underestimate the complexity of the infrastructure environment that a lot of banks are dealing with. They were built up over a long period of time," he said.

Clyne said today that the bank was now focused on seeing that those who were affected by the delays were not left out of pocket.

He said that the constraints of batch processing was one of the reasons why the bank had started its next-generation program in conjunction with Oracle to revamp its core banking system, which Clyne says will replace 110 legacy systems.

"The issue we have experienced recently has absolutely validated that decision."

So far, the bank's online arm, UBank, is using its new core banking system. Clyne said that NextGen would be supporting the majority of NAB products and customers by 2012.

Yesterday at a Senate Estimates committee, Commonwealth Bank CEO Ralph Norris said that his bank had already moved all of its retail accounts onto its SAP-based core banking platform, with merchants to follow next year.