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SA urged to learn from second UK bank computer glitch disaster

UK bank NatWest, a member of the Royal Bank of Scotland (RBS) group, suffered its second major IT system collapse in nine months last week, with the result that many of the 7.5 million customers affected threatened to cancel their accounts on social networking sites.


Ray Stride, Managing Director of Global Continuity South Africa - a group company of JSE-listed Metrofile Holdings Limited – says such incidents can cause severe reputational damage for businesses that do not ensure appropriate Public Response protocols are incorporated into their Business Continuity Management plans.


“Hours after the incident occurred, NatWest customers had still not received any feedback about the cause of the IT glitch or whether they would receive compensation. During times of crisis, it is imperative for any organisation with a large clientele base reliant on immediate access to critical services – especially the banking and telecommunications sectors - to ensure effective Public Response protocols are in place to mitigate the risk of reputational damage and the subsequent financial losses due to lost clients.”


Despite the financial losses, the reputational damage NatWest will suffer may be irreparable, says Stride. “Clients and staff could migrate to other banks, shareholders may dump their stock, public confidence in the brand will take a significant knock providing a perfect environment for competitors to take advantage of the situation and the banks could be heading for a rating downgrade which will increase interest rates and hammer profits and competitiveness. Certainly, since this is the second time that this has occurred, probably no public statement, however well crafted, will placate irate clients.


“At the heart of the matter is an inability to adequately manage the risks which give rise to these outages.”


These severe repercussions could easily have been avoided had the banks implemented effective Public Response plans that focussed on providing customers with a clear understanding of the situation and solution to their problem, says Stride.


“The lesson to be learnt from the NatWest disaster is that all industries and organisations that are heavily reliant on real-time service delivery must ensure an appropriate Public Response to disasters is incorporated into a sound Business Continuity Management plan to mitigate reputational, legal and financial damage,” said Stride.

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