[LINK] [NAB] Bank calls in KPMG to review system debacle

[Bernard Robertson-Dunn]

<brd>
Declaration: I work for KPMG but have no involvement in this review
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Bank calls in KPMG to review system debacle
Fran Foo
The Australian
December 07, 2010 12:00AM
http://www.theaustralian.com.au/australian-it/bank-calls-in-kpmg-to-review-system-debacle/story-e6frgakx-1225966632302

NATIONAL Australia Bank has brought in KPMG to conduct a forensic 
examination of the processing meltdown that affected millions of customers.

NAB chief executive Cameron Clyne, who apologised in newspaper 
advertisements over the debacle, will go through the KPMG report in detail.

The NAB processing system started going belly-up two weeks ago in the 
early hours of November 25 due to software coding errors. It is 
understood someone with access to NAB's mainframe systems, either an 
internal staff member or one of the bank's IT outsourcing partners in 
India, inadvertently bypassed a piece of code that checks BSBs against 
addresses.

This happened during the batch transaction cycle and disrupted the 
bank's ability to process the files.

The systems that NAB and other banks rely on for transaction processing 
are robust but each line of code needs to be executed sequentially.

NAB was asked to confirm if the BSB-checking error had led to the chain 
of events, but spokesman George Wright would not provide more 
information pending the review.

"What we are primarily focused on at the moment is ensuring that we 
address all the customer impacts associated with the processing delays 
that impacted customers are not left out-of-pocket as a result of the 
delays," Mr Wright said.

"We do though take this matter very seriously and will also be 
conducting a very thorough review of the incident and any issues 
associated with it across all relevant areas within the bank."

Mr Wright confirmed that last week NAB appointed KPMG to probe the 
causes behind the IT disaster. "I can confirm that NAB has initiated a 
comprehensive investigation and review of the incident and all relevant 
matters associated with it," he said.

"This independent review will be conducted by KPMG and will be provided 
directly to the CEO."

Mr Wright could not say when the review would be completed but that it 
had commenced and would be "conducted promptly but thoroughly and 
properly". What remains unclear is why it took so long for NAB to 
resuscitate its systems after the initial coding errors, which also 
affected other banks, such as Commonwealth, Westpac, ANZ, HSBC, St 
George, Bank of Queensland and Citibank.

The IT saga left many unable to access their salaries or welfare 
benefits. Other account holders reported missing or duplicate transactions.

More than 6500 compensation claims from customers seeking refunds of 
bank fees, interest and late payment charges had been lodged with the 
bank as of late last week.

Small business retail peak body United Retail Federation said it was 
seeking legal advice on a possible class action against NAB for losses 
blamed on glitches with the bank's auto-teller network, eftpos system 
and credit cards.

Over the past few years, NAB has identified pieces of its core-banking 
technology functions to outsource to the likes of Infosys and Satyam 
under its information technology outsourcing strategy spearheaded by 
former chief information officer Michelle Tredenick.

Signs that NAB was gearing up to shed jobs became apparent in 2008, when 
then NAB technology banking general manager Craig Bright said IT staff 
numbers could drop from 2600 to fewer than 1000 over the next five 
years. He told IT employees during a briefing that the cuts would come 
as a result of the ITO exercise.

As reported last week, about 400 NAB IT infrastructure roles are about 
to be transferred to IBM under an outsourcing arrangement. The Finance 
Sector Union has called on the bank to provide a briefing on the system 
error, its causes, remedies and future avoidance strategies. The FSU 
said NAB had yet to respond.

The union wants the bank to postpone employee performance objectives, 
such as customer satisfaction ratings, that would have been influenced 
by the glitch.

The processing problems have not been fully resolved, NAB's website 
yesterday said: "We know that some customers are still experiencing 
inconsistencies and we're actively working to address these as soon as 
possible."

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Regards
brd

Bernard Robertson-Dunn
Canberra Australia
email:	 brd at iimetro.com.au
website: www.drbrd.com