Tan Kin Lian's Blog: MAS and DBS computer glitch

Wednesday, July 14, 2010

MAS and DBS computer glitch

From what I read, MAS is going to hold DBS Bank accountable for the computer glitch that cause failure of banking services for 7 hours on 7 July 2010.

After operating its massive online banking services for many decades, this is the first time that DBS has encountered a serious failure of this nature and it is caused by a "routine repair job". It is not the second, third or repeated occasions.

Several thousand customers were inconvenienced, but no money or lives were lost. We should expect this type of unfortunate, embarrassing event to occur, and should not overact to them. It is better to learn from the experience.

Singapore has a culture of "no tolerance for failure". Is this going to be another example of over-reacting to a mistake, to edge into the psyche of Singaporeans?

If we are not careful, another Singaporean culture will manifest - finger pointing. DBS officers will be pointing fingers to IBM and in turn IBM will be pointing fingers to their subcontractors or employees. A scrape-goat will eventually be found.

The likely response to this type of problem will be another layer of security and complexity and expensive consultants to advise on their implementation. Eventually, bank charges will be increased to cover the higher cost.

I hope that common sense will prevail over these dominant Singapore cultures, and that a low cost solution be found. There is no need to have a fully integrated system that can be brought down by a "routine repair job". It is better to design computer systems that can operate independently to handle the volumnous small transactions and have simple recovery procedures that can be activated easily, when the unexpected happens.

Tan Kin Lian

22 comments:

Anonymous said...: I am puzzled that "MAS is going to hold DBS Bank accountable for the computer glitches", while not investigating the "FIs that sell structured products (which caused much loss of money and sleep)".

Just think about the contrasts between these 2 events:

(1) Technical glitch versus breach against S27 Fin Adv Act.
(2) A single instance versus many trespasses by many FIs.
(3) Inconvenience versus loss of money and sleep
(4) Mechanical glitch versus hurt on human morality and trust.

Cashew Nut; July 14, 2010 8:10 AM
Anonymous said...: at least the CEO of DBS said sorry and take full responsibilities. will our govt do the same for their mistakes too?; July 14, 2010 8:28 AM
Anonymous said...: Glitch or not, customers wull continue to use DBS as the preferred bank. Simply because they have the largest ATM network and hence convenience.

Just like overcrowded or not, the MRT will continue to be used by many commuters.

Or expensive or not, HDB flats wil still be the preferred choice of many people simply because no other choices are cheaper.

The list goes on, so whether CEO or minister say the right or wrong thing or resign or not, etc doesn't really matter.; July 14, 2010 8:50 AM
Anonymous said...: This is a case of Regulator attacking a "non-issue" and it will end up no where as the culprit is the Ang-Mo Company call IBM. Fine DBS? Fine IBM?

Not possible. DBS belongs to Sgp Govt and IBM is American. Remember that MAS cannot do anything with Goldman Sach or JP Morgan when load of people were conned into buying structure notes.

So what if due to some technical problem down ATMs for 7 hours? Find the root cause and ensure no reoccurrance.

Hope the MAS don't do such thing like:

"We cannot gaurrantee that such incident will not happen again"

"The publication has turnish the reputation of the bank"

"You join the bank at your own risk. We cannot micro manage bank."; July 14, 2010 8:58 AM
Anonymous said...: Some one will come to say that Singapore will not be free from computer glitch, like the flood.; July 14, 2010 9:13 AM
jovan said...: i totally agree with cashew nuts; July 14, 2010 9:23 AM
Anonymous said...: As I said earlier, time for another round of pay rise for a job well done - identifying the cause of the problem.; July 14, 2010 9:33 AM
Anonymous said...: Outsourcing is all about being able to point finger. Otherwise outsource for what? Might as well own self shoulder and do.; July 14, 2010 10:01 AM
Anonymous said...: There is a headhunting firm right now, looking for a "crisis manager" for a certain American computer company. It seems this American company is handling services that a certain big local company had previously outsourced.

The "crisis manager" will have to manage the "staff" and report to "very senior management".

For all the experienced unemployed IT PMETs out there. If you apply for this job, remember to ask for at least 3 times your previous salary. This job is likely to require you to silenty fall onto your own sword if things don't work out.

Don't take my word for it. Just quietly make enquiries on your own. The letter "H" is the clue to getting an interview.; July 14, 2010 10:03 AM
C H Yak said...: Such risk is just like the "back-door virus" at Changi MRT Depot ???; July 14, 2010 10:34 AM
Anonymous said...: DBS never gets its operation right.
The problem is the misconception that the Bank must hire foreign talents as CEO. So far all the CEOs corked up the bank - the Bank scooped up Dao Heng Bank of HK at a then eye poppingly high price, the same with the Thailand bank at the height of the Asian Financial crisis, people losing their valuables in HK when their contractors demolished the deposit boxes by mistake, then trying to squeeze the Royal Bros of their building in Malacca Street, which in the end fell to someone else.
So much adverse publicity for our own so-called National bank.
When are they waking up to the fact that all foreign CEOs are necessarily better, they are all to grab high pay and bonuses, at the expense of the Bank's interests and their clients.
Increditable that the bank, in order to save costs, outsources all its IT operations to outsiders.; July 14, 2010 12:11 PM
Anonymous said...: Cashew nut is right. A lot of times the government agencies make a lot of hue and cry to show they are taking care of the interests of the people.
In reality, non-issues get highlighted and get a lot of coverage. And major issues like the minibonds, mis-selling by banks, misleading advertising and other tricks of making billions get a blind eye from the regulators.

And speaking of inconvenience, I think MRT has far more issues of delays, trains getting stuck or other several forms of failures that impact millions and are just explained away by how big MRT is, how many people it serves and how it is obviously good because in country a,b and c, it is much worse than here. Does the SMRT CEO ride on MRT and SMRT buses?

All this noise will just lead to more controls, added cost and mode delays for which the customers will end up paying.

Charlie Singapore; July 14, 2010 12:38 PM
Anonymous said...: it has happened. just move on, we are singaorean.; July 14, 2010 1:11 PM
Anonymous said...: Banks charge us for all services ..... so now should we charge them back ? It's just like a "bounced" cheques, so DBS should compensate its customers for it's "down" services !; July 14, 2010 1:13 PM
Anonymous said...: We have a culture of 'no tolerance for failure' which is not very true. It only applies to the lower end of the food chain.

In the Mas Selamat case, the question is, who took the blame in the end? Not the one in charge, or the one after but the one right at the bottom. In fact they are indirectly laying the blame on all Singaporeans.; July 14, 2010 5:04 PM
Anonymous said...: Can somebody please help. I'm losing track of all these once-every 50 years type events;

a) Mas Selamat escape
b) Orchard Road floods
c) MRT depot security breach & vandalism
d) DBS computer glitch
e) Mortgage-backed securities eg mini-bonds
f) increase monetary assistance to the poor and needy families
g) sudden increase of immigration into Singapore
h) new casinos
i) a seat on MRT trains during the rush hours

Now that I've completed a partial list, I realize the wisdom of our leaders. It really is better to just "move on".; July 14, 2010 6:49 PM
TG said...: I doubt MAS is really serious in investigating nor in punishing DBS in the computer glitch matter. Having seen how it handled minibond debacle previously, MAS only "wayang" to appease the numerous angry Dbs customers who were affected during then.

The glitch may have been unintentional but I disagree that MAS need not look into the matter aggressively to ensure that there is not such repeat by Dbs. Customers deserve nothing less than a basic level of service at ALL TIMES .

Of course the gross charges levied on dishonoured cheques, etc, by banks are also exhorbitantly high and many are unaware as they think only a flat $40 is charged. In actual fact, there is also a overdraft interest which is accrued over 1 to 3 days depending when the cheque is presented and charged at 5 percentage point above Prime Rate ( Dbs’s Prime Rate is currently 4.25%p.a) -- for the shortfall sum of money -- in the case of Dbs or POSB dishonoured cheques.

Try asking a TRULY KNOWLEDGABLE Dbs or Posb bank staff the total bank charges for the following scenario (mind you, many of the bank staff are not aware of the actual charge in this example):

Say i only have $10 in my account at the time when someone who bears my cheque which was issued (by me earlier) for a sum of $200,000.

So when the bearer presents to my bank for payment on a FRIDAY, the cheque naturally will be dishonoured as there is a shortfall of $199,990.

Dbs and Posb bank will never call you for any instruction nor extend any Overdraft to you to enable honouring of your cheque, therefore they will dishonour the cheque outright and charge 3 separate fees for that single bounced cheque—

1st $40 for the one dishonoured cheque,
2nd Minimum $20 for Overdraft interest (Prime Rate PLUS 5% p.a= 4.25 + 5% = 9.25% p.a/day)with No Upper LIMIT . In this case, overdraft interest per day is $50.68 {[9.25/100 x (200000-10)] /365} .
So total Overdraft interest charge for 3 days (ie. Fri, Sat and Sun) will be $152.04 ($50.68 x3)

3rd. $2.14 for allowing a Negative Balance for the month
In other words, for a cheque to be presented on a Friday and shortfall of $199,990 in the personal current account, for whatever reason—the grand total bank charges is $194.18
As a matter of curiosity, Mr Tan KL, while you frequently complain of bank’s exorbitant charges, are you also aware of Dbs/ Posb such charges??
Such charges has been in existance for the past ten years.; July 14, 2010 8:23 PM
Anonymous said...: Check your account balance! We don't know what really happens.; July 14, 2010 11:22 PM
Anonymous said...: MAS or Govt solution below:

a) Mas Selamat escape: Sack the handlers & directors.
b) Orchard Road floods: No gurrantee it will not happen again.
c) MRT depot security breach & vandalism: Punish culprit. Luckily he is not American, else must be lenient.
d) DBS computer glitch: MAS "Not My Problem"
e) Mortgage-backed securities eg mini-bonds : MAS "Not my Problem"
f) increase monetary assistance to the poor and needy families: Good for PR for coming election.
g) sudden increase of immigration into Singapore: Govt: "Good GDP = Good Minister Salary"
h) new casinos: Good GDP=Good Minister Salary.
i) a seat on MRT trains during the rush hours: MRT "Not my Problem"; July 15, 2010 9:42 AM
Gary said...: The glitch was supposedly caused by the use of an 'outdated' set of instructions by IBM engineers/technical staff. If this true, one must seriously rethink how good IBM really is that it lacked even basic procedure to ensure outdated tools are clearly removed and made this known to its staff, or a least how it views DBS as a client.

As for the MAS's reaction, well it is purely for public consumption or be accused once again of inertia. It was merely a wayang, a politically correct response that is all smoke but no fire.:((; July 15, 2010 8:10 PM
Soojenn said...: DBS is accountable for the computer glitch.. t is irrelevant if MAS is holding them responsible.

When they made the decision to outsource this seemingly important function, they should have perhaps already weighed the costs and potential consequences. What happened is unacceptable even if it is only one time. This is unheard of in other reputable international banks, unless DBS is not considering themselves so, but perhaps a third rate bank?

Crash because of a "routine repair job".. this must the the joke of the day. What was the real cause for this crash. Why is the outsourced vendor not more forthcoming? Mere layman like us know better reasons that what has been spewed by the vendor, who appears to think most Singaporeans are "ignorant"? as the Singapore old wise man has spoken thus.

No finger pointing.. DBS has to fully understand the cause of the crash, and be able to explain clearly to its client, not just babbling excuses.

KL, there is a major crash.. shouldn't there be accountability for this?

DBS is already paying millions to outsource this to a blue chip MNC. I therefore cannot see your logic that if they are being held accountable that they will now need to get expensive consultants to advise on their implementation. What are they paying IBM for? Such pathetic performance? Perhaps they should have kept some key IT people (plenty of good ones in Singapore, I am sure) who fully understand the system to monitor these supposedly "experts" like IBM? But then again, it is usually the top management, the ignoramus of IT that is making the decision on the outsourcing of such important work.

Low cost solution - don't pay millions to incompetent vendors. Keep quality IT staff in the company. Was there a clause in this service to make the vendor pay for down time? Most contracts do, however I am not sure the incompetents in DBS have this covered.

COme on, KL, do you really buy the line that a "routine repair job" is bringing down the system. Speak to any IT person worth their salt and you will have the answer.

What happens shows a lack of competence, duty of care, and negligence on the part of the vendor. DBS shoulders the most responsibility for outsourcing to this vendor; July 16, 2010 1:02 AM
Tan Kin Lian said...: Dear soojenn

You are free to express your views. I agree with most of your points.

There is no need for you to take issue with my views. I do not wish to engage in a debate with you about the extent of accountability.; July 16, 2010 6:55 AM

Wednesday, July 14, 2010

MAS and DBS computer glitch

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