(11 December 2019 – Australia) Banks suffering outages will no longer be able to hide from H1 2020 as the RBA cracks down on costly system errors.
The Reserve Bank of Australia (RBA) has followed through on its commitment to name and shame malfunctioning institutions in H1 2020, with RBA Governor Dr Philip Lowe confirming the stance.
A key distinction is how banks classify outages, especially what rates as a so-called 'severity one' incident. Currently banks internally benchmark in terms of how incidents are reported. That approach is targeted to change under the RBA's new regime with the central bank determining what constitutes an official outage and subsequent reprimands.
The RBA noted that banks have been resistant to regulators insistence to officially publish regular statistics on payment systems dependability and online uptime, especially as official data could open the door to merchants compensation claims.
A key point of contention expressed by the banks is that outages that hit key services often originate from infrastructure failures at service providers, such as Telstra. East & Partners customer satisfaction research indicates many businesses often struggle to determine who is ultimately at fault when systems crash but regardless of where the fault falls, the negative impact on revenues and customer sentiment is highly detrimental.
The bank's explanations have had minimal impact on the RBA which has repeatedly warned uptime must improve because the economy is now reliant on digital and electronic payments. Dr Lowe noted banks were not pleased at the idea of having errors roundly criticised in the public domain however outperformance was important to promote as was relative performance or underperformance.
“The RBA is very keen to see outage data published at the individual institutional level. It’s important for public transparency and confidence in the system. Over the course of the next six months, we have to finalise that it's really important that people have confidence in the electronic payment system. We've seen examples through the course of this year where businesses are not able to sell their goods and services because the electronic payment system went down and people didn't have enough cash in their wallet. It's really important to a modern economy that the electronic payment systems working well” Dr Lowe stated.
“It is fair to say not all institutions were enamoured by the idea, but we think it is important for public confidence and transparency in the system and hopefully it will allow institutions to benchmark themselves against other institutions” Dr Lowe added.