Industry points finger at EDS over $1 billion banking fiasco

Last week's processing failure in the banking industry, where $1 billion of transactions were affected on Tuesday night, can be put down to an operational failure at EDS, industry sources say. The processing failure happened at 4.30am on Wednesday morning, resulting in around 12 files being held out, affecting 400,000 transactions. Consequently, the banks were late in updating their databases, resulting in a raft of unhappy customers. Computerworld has been told that the problem was to do with database sizing and management at EDS, which contracts to Interchange and Settlement (ISL), the interchange consortium owned by nine banks.

Last week’s processing failure in the banking industry, where $1 billion of transactions were affected on Tuesday night, can be put down to an operational failure at EDS, industry sources say.

The processing failure happened at 4.30am on Wednesday morning, resulting in around 12 files being held out, affecting 400,000 transactions. Consequently, the banks were late in updating their databases, resulting in a raft of unhappy customers.

Computerworld has been told that the problem was to do with database sizing and management at EDS, which contracts to Interchange and Settlement (ISL), the interchange consortium owned by nine banks.

On a normal night, around $40 billion of interchange business is transacted. The Bank of New Zealand is understood to have been the worst affected. Most particularly payroll was affected and, in the main, government payroll. EDS referred inquiries to ISL, which referred them on to the New Zealand Bankers Association.

Spokesman Simon Carlaw says the causes have not been identified. “I have heard of three or four possibilities identified as causes,” he says. “Our perspective is that this sort of processing problem is unacceptable. ISL is responsible to its owners.”

When asked specifically who the owners were, Carlaw didn’t know. Pressed further for information, he said: “I obviously can’t help you. I’ve got other calls to answer.” He then hung up.

What is disturbing is that no one seems to want to take ownership for the problem. EDS is flicking it on to ISL, whose general manager, Trevor Burgess, says he can’t comment because his shareholders have put all comment in the hands of the association.

Carlaw clearly has no idea of the intricacies of the situation. There are penalty provisions under the various contracts.

“It was a straight out cock-up,” says one source. “The biggest liability is for EDS. They’ve got banking customers moving back to Australia. If they don’t sort things out, others will.”

After initially not being able to say where the problems lay, EDS put out a press release on Thursday saying they were caused by the introduction of some enhanced software designed to provide a new banking industry requirement for real- time settlement with the Reserve Bank.

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