4 ms·
> An internal review at the bank found humans manually operating the old software were ultimately at fault Which is of course an entirely bogus cop-out. If a m
by PaulAJ 6y ago
> An internal review at the bank found humans manually operating the old software were ultimately at fault
Which is of course an entirely bogus cop-out. If a mistake can be made in a manual operation then sooner or later it will be. Lower down the article says that manual checks that were supposed to catch this error failed to do so. Ineffective checks are a management responsibility, and that responsibility goes all the way up to the CEO.
- sharken 6y agoAt least Citibank is trying to upgrade their ancient systems, but it sure looks as if previous or current CEOs failed to exercise due diligence. Doesn't look like good risk management at all.
- HenryBemis 6y agoCiti is one of them banks that spend a lot of their $$$$$$ in IT. They jokingly say that they are an IT company with a banking license. Anyone related can please pitch in with a TA account. How bad/frequent are their Software Errors?
- leokennis 6y agoI mean...if this were any other business, someone clicking the wrong button and then someone else not catching this error would maybe mean someone's account was accidentally closed, or someone receiving a free pizza, or whatever. The IT systems within banks are more or less the same as IT systems anywhere. Just as advanced, just as crappy. The difference is that if there is a human error with banking software, you're not sending free pizza, you accidentally pay ouy $900,000,000.
- deleted 6y ago[deleted]
- tumetab1 6y agoActually, banks risk management is easy. Most in-bank or between banks transfers are reversible and usually a non-issue. That why the risk management probably says something like this: Risk: Incorrect transfer of funds to customer in another bank Mitigation: Manual review of all funds transfer above 5 million dollars Mitigation: Besides litigation issues, lost funds are easily recovered by asking the receiving bank Status: Risk accepted Edit: Clarified "Mitigation: Besides litigation issues bank transfers are reversible" into "Mitigation: Besides litigation issues, lost funds are easily recovered by asking the receiving bank"
- user5994461 6y agoBank transfers between banks are not reversible.
- netsharc 6y agoDo you mean when the mortal clients of the banks are doing them, or when the banks are doing them? I imagine bank CEOs know each other and can even call each other and say "Oh sorry old chap, that was a mistake!".
- pieno 6y agoMost bank transfers are actually not reversible, except for some limited retail client (including small companies) operations where specific terms & conditions allow the bank to reverse payments to the extent possible, which they really prefer avoid using as it looks really bad for a bank whose most important asset is the confidence of its clients and counterparties. Reversal may also no longer be possible if the money has already gone out in a system that does not allow reversal, or if the client is bankrupt in the meantime (depending on local banking and bankruptcy laws and circumstances). For any other payment system for larger sums / corporate and institutional parties, settlement finality is a huge thing that is the subject of all sorts of specific legislation, as it would be a real issue for the health of the financial system if a settled payment can simply be reversed, as it would have a lot of unintended consequences further down the line. So banks actually do have strict risk management policies to avoid wrong payments, but there are so many complex transactions for which ultimately a human (actually at least 2 due to 4-eyes principles) must confirm whether conditions for payment are satisfied and whether payment details are correct, and humans are always prone to making mistakes once in a while.