Retail banking: another Aussie banking tech failure

A month ago, Australia's massive Westpac bank had a major problem with its banking systems leaving customers without the funds they expected to be available to them.It was not the first time. What Australian banks call a "glitch" also caused a problem for Westpac in March. Then the bank blamed "demand" when its internet banking system went wrong.

It's not just Westpac: most of Australia's major banks have had some kind of technology malfunction in the past year leading to payments not being made and customers running into cashflow difficulties.

It is not clear whether the latest problems are anything to do with Westpac's integration of St George into its (previously retired) Bank of Melbourne brand which began a rebranding exercise in the past few days.

In the latest problem, Westpac admits that it does not know how big the problem is. But money destined for its own customers is delayed as are the payments they have scheduled or try to make.

That has a knock-on-effect for customers of other banks.

It is an issue that Australian banks do not turn into a competitive advantage - while saying that they are all in this together, what they actually mean is "there but for the Grace of God go us."

And it has been them.

In some cases, banks have had to increase the security presence in branches as increasingly irate customers, unable to use payment cards or ATMs besiege branches to get access to cash. Branches have had to run extended hours - in Australia that's a complete anathema to a culture that says that offices and shops close at 1730 and everyone goes home. Outside Sydney, Melbourne and tourist spots, restaurants and bars are generally closed by what, in many other countries, is a remarkably early 2300. Weekend working is almost unheard of in the service industry.

The current problem arose overnight and therefore millions of payments due into accounts today have not been processed.

Westpac says that it is working on the problem but that payments are still subject to delay. Customers should, however, not delay issuing instructions: they will be acted upon as quickly as the bank can get to them, it said.

The universal approach of the banks to these problems is to say that they will not charge customers for overdrafts caused by the failures, including penalties on late loan payments. But that does not compensate businesses which are unable to pay their staff because the bank does not grant temporary overdraft facilities or those who have set payment schedules with third parties.