RBA, APRA could name and shame over Internet banking outages

Reserve Bank concerned in growth of outages

The Reserve Bank of Australia is working with the Australian Prudential Regulation Authority (APRA) on developing standards for reporting the performance of retail banking services after a spike in outages at major financial institutions in 2018.

Data gathered by the Reserve Bank of Australia reveals that although outages of Internet and mobile banking services declined in the period from 2014 to 2017, there was a “sudden reversal” in 2018.

RBA assistant governor Michele Bullock this week told a conference in Berlin that in 2018 the total duration of outages of Internet banking and card acquiring services at the point of sale “rose sharply”.

“The rise in total duration was due to both a rise in the number of incidents and in the average duration of incidents,” Bullock said. “In other words, incidents were more frequent and services took longer to be restored.”

The average duration of outages grew from around four hours in 2017, to greater than six hours in 2018. The number of incidents grew from 200 to more than 300, with the total duration of outages soaring from less than 1000 to more than 1500, figures compiled by the RBA reveal.

“Around half of the number of service disruptions in 2018 were to mobile and online banking channels, while card services accounted for around 10 per cent of the incidents,” Bullock said.

“The most common reported cause of outages was software failures. Both the number of software failures and the average time taken to resolve the issues rose sharply in 2018. More generally, the increasing complexity of the IT environment seems to be an important reason why incidents are taking longer to become resolved.”

There is a case for the RBA to be “looking at what it can do to encourage improved operational resilience,” she told the conference. In addition to working with APRA on performance statistics, the Reserve Bank will “be engaging more with institutions to better understand the challenges of their IT systems and how they are managing operational risks to payment systems.”

Earlier this month the RBA released a report making the case for access to the New Payments Platform (NPP) to be broadened and for the potential introduction of a system of fines for NPP participants that support some of the platform’s core capabilities.

“In May, more than 18 million transactions were processed through the NPP amounting to over $15 billion,” Bullock said in her speech.

“This is still small relative to the volumes that pass through other retail payment systems. But it is growing steadily and at least as quickly as some comparable overseas fast payment services when they were introduced.”

“One of the positive aspects has been the broad participation of many small financial institutions,” the RBA assistant governor said.

“Customers of around 50 small banks, credit unions and building societies were able to make and receive fast payments from day one and that number has since grown to around 70. We expect the volumes to continue to grow as banks increase the functionality they provide to customers.”