Nat West Computer Failure

Nat West Failure - What can banks learn from Cloud Service Providers?


Tuesday, June 26, 2012 | Tom Kirk

The outage of Nat West's systems has been going on for six days now and the firm is being criticised for its handling of the situation and how it has communicated with its customers.

Nat West is finding, to its cost, that its initial policy of giving messages of reassurance to customers is not enough. People need to hear what has gone wrong, how it will be fixed and how long that fix will take.

At this point Nat West should be looking to the examples set out among the cloud computing sector and how firms such as Amazon and Microsoft deal with outage problems. Both Microsoft and Amazon run status services which offer region-by-region break downs of how services are operating and their status during any outages; allowing users to understand fully what is being done to overcome any problems.

Consumers of these cloud services are being treated in an open and frank manner which not only reassures them, but also shows the firms respect and value them. Nat West's failure to offer full and frank admissions of what has happened shows them to be out of step with those mass-user platforms currently leading the sector.

The engagement level of the bank has increased as the crisis has unfolded; the initial response was to post several updates a day on its homepage, though these offered reassurance and were scant in technical details. By Sunday the bank was no longer posting updates on its home page, meaning only those signed in to their online bank accounts could view them; alienating the portion of their customer base which does not use online banking.

The chief executive of the RBS group, Stephen Hester has now posted a message on the homepage, though it is short on detail about what has actually happened. While most people's primary concern will simply be how soon they might be able to access their money, in the longer term people need answers and the apparent secrecy does nothing the enhance the reputation of Nat West, or the troubled banking sector as a whole.

Nat West seems to be operating with an attitude that through secrecy comes security, pedalling the belief that due to the sensitive nature of its business it is not possible to be open. Again, the bank should look to the providers of cloud solutions for an example; these services have just as much need for high security, yet manage to be open about how they operate and what has happened when things do not go according to plan.

Nat West, meanwhile, through its lack of information is feeding online speculation about what has gone wrong; with some feeling the bank has become the victim of its own cost-cutting measures which have seen a raft of its IT jobs outsourced to India. RBS, Nat West's parent company, has moved to quash such rumours, but the bank is now beginning to reap the kind of reputational damage that comes from poor crisis management.

What should be clear as a result of Nat West's problems is the need for the bank, and the financial sector as a whole to operate with a greater level of transparency. The industry needs to look outside itself, to cloud providers such as Amazon, which face similar security pressures to see how to traverse the difficult ground of disclosure. How to balance the need for security with the need to offer users the information and reassurance they need in order to maintain their confidence in the services being offered.

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