NAB offloads to IBM and pushes ahead with core revamp

Beverley Head
Thursday, 16 December 2010 14:42

IT Industry - Deals

IBM has signed one of its biggest global deals of the year, following big four bank NAB confirming today that it will offload the management of its data centres to the computing giant. Originally scheduled to be signed in November the deal was delayed when NAB's computing systems failed, leaving customers with no, or wrong, account balances for an extended period.

In his address at the company's Annual General Meeting today NAB CEO Cameron Clyne provided additional detail about the events which led to that computer failure and said that it demonstrated the critical importance of the bank's continuing core systems overhaul. He said that the NextGen overhaul was now scheduled to be largely complete by the end of 2012.

Having IBM in charge of the bank's computer centres should at least make it easier to point the finger of blame in the case of future system crashes. This time around the major culprit was today identified by Mr Clyne as a 2001 software rewrite, which combined with a miscoding error to lead to the major systems stuff up.

The bank today updated its website notice about the systems crash. While most account balances are now up to date, some customers are still 'experiencing inconsistencies' which NAB was working to address.

That it has yet to remedy all account balances 20 days after the system crash is remarkable in itself. The bank has now set itself a deadline of the end of January 2011 to refund incorrect fees and interest charged.

Its website statement notes that; 'Affected customers will be refunded all interest that was incorrectly debited from their accounts (debit interest) and any incorrect fees that were charged between 24 November and 7 December 2010 as a result of our delays. We aim to have all refunds on transaction and overdraft accounts, and the bulk of refunds on our other accounts, completed by the end of January.'

In terms of the triggers for the collapse, Mr Clyne today said that the 2001 software amendment was required to take account of the abolition of Financial Institutions Duty. He said that a miscoding error, combined with that 2001 rewrite had led to duplicated transactions and the ensuing account balance debacle.