This case discusses a crisis at the Royal Bank of Canada (RBC) that occurred on May 31, 2004. The crises involved a programming change to a vital piece of banking software. An incorrect change to the code led to the failure of the bank’s programs which in turn led to customers that could not check account balances, customers (and non-customers) that did not receive paychecks, automatic payments and bank transfers that were delayed, and duplicate transactions.
The code that was entered incorrectly was quickly fixed, but before that could happen, bad data was sent throughout the banking system that was difficult for RBC to track. As the bad data needed to be corrected from previous days, new data and transactions continued to pile up until RBC could begin processing the transactions again.
In addition to the problems caused by the technology glitch, there were issues with how the company handled the crisis with its customers. At first the bank publicly announced the problem would be resolved in three days. When that day came they needed another three to four days to continue to deal with the problem. The bank’s CEO left the country when he was told that everything would be operating normally three days after the error occurred. As customers continued to experience problems in the days after the initial problem, there was no one single person to manage the public relations with the bank’s stakeholders.
RBC’s problems provided hackers and scam artists the opportunity to take advantage of those that were affected. These crooks sent emails that tricked customers into providing user IDs, passwords, and account numbers.
In all the issue took about a month to resolve and the RBC gave customers 90 days to file claims with the bank. RBC also hired an adjuster to help with losses as a result of the problem and hired IBM to consult with the cause of the problem as well as how to prevent the problem from happening again.
The key flaws of RBC’s controls and actions in this case are:
• RBC’s lack of a quality assurance (QA) control that tests programming changes before being released to production.
• A flawed procedure for managing the back-up computer systems.
• Incorrect assumptions about when the applications would be back online which led to an ineffective public relations and information exchange between the bank and the stakeholders.
• RBC’s failure to warn the customers about potential scam artists.
paperwork. NBC came to the decision to take all the paperwork away from the account
Consistency constraints may be violated despite proper integrity enforcement in each transaction. For example, incorrect bank balances might be reflected due to simultaneous withdrawals and deposits on the same account, and so
The banking industry is under pressure in today’s business climate. Banks have been through big changes. There is opportunity, but there is also increasing competition. To be the preferred bank means changing “good enough” into a unique value proposition. And that means changing the way people have always done things, change on this level requires cutting edge technology. Change cannot be achieved with a simple directive or surface adjustment especially within the banking industry. It requires an innovative rethink of the entire system, in a strong partnership between bank leaders and their change agents. New systems and policies must support the strategy to be successful. The real test of a good strategy implementation plan is whether the people understand the strategy, are motivated and enabled to implement it, and actually start achieving its goals.
Stegman, M.S. (2005). Coding & billing errors: do they really add up to a $100 billion
Regulators were believed to have detected problems as early as January 1999. These regulators should have been the ones to step in and notice that things weren't going the way they should have been. Instead Superior's management is bearing the brunt of the blame in this situation. Ellen Seidman states "responsibility for the success or failure of any depository institution rests with its management, directors, and owners." This may be true but if management and financial intermediaries had been performing their tasks properly they would have n...
...anks while limiting that blame to a small number of specific banks that are not any specific listener’s bank.
New Years Eve of 1999 was an exciting time for a large group of people around the globe, moving into the new millennium. It also was a time of paranoia for an equal amount of people. The advent of personal computer use was blooming around this time, and so were a large number of misinformed people who were not understanding of their computers internal programming. The year 2000 problem, shortened to Y2K, was the problem of using two-digit dates in a large number of software, instead of four digits. The fear was, on January 1st 2000, a large number of software and services would stop working because of this programming error. The Y2K problem was a significant event in recent history, an event that was overhyped by the media and had little impact on everyday operations, due to the work of the programmers.
Trading on a major Asian stock exchange was brought to a halt in November of 2005, reportedly due to an error in a system software upgrade. The problem was rectified and trading resumed later the same day.
Flow of the information should have been better than this, top and bottom management didn’t work together properly resulting in failure.
It is been observed that Tegan’s A/P system was very complex and they had to pay their bill at the appropriate time. The system was been brought to its breaking point as per the Tegan’s increase in its volumes as well as vendors. The system was been blocked as per its runtime errors as well as blocked records. These lead to create problem for Tegan’s team and it’s a/p system staff and employees. Where these lead to create a major problem of Tegan’s finance as well as IT department who thought that this might create a huge issue in th...
The summary we can make after read the case study is the system down in RBS Company has make the million of customer unable to access their account. The management in Royal Bank of Scotland (RBS) have found people who have caused the problem which is the junior technician from India, who accidentally erased a massive swathe of information during a routine software upgrade...
..., Crisis communication failures: The BP Case Study, International Journal of Advances in Management and Economics, Issue 2, March-April 2013, accessed 28 March 2014,
There has a certain situation that will occur this opportunity such as monitoring of management is not effective, complex organisation structure, and internal control components are deficient. In Cendant case, the CUC made various adjustments to incorporate the misstatement into the general ledgers and this causes the opportunity to fraud happens.
During this problem happen, there were 100 million transaction is being effected. The deleted information is reenter back to the bank computer system. This problem is take time to solve it. Because of this problem, the bank is promises to all the customer that being effected by this problem that they will reimburse the fires and the late payment f...
STATE BANK OF INDIA The origin of the State Bank of India goes back to the first decade of the nineteenth century with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806. Three years later the bank received its charter and was re-designed as the Bank of Bengal (2 January 1809). A unique institution, it was the first joint-stock bank of British India sponsored by the Government of Bengal. The Bank of Bombay (15 April 1840) and the Bank of Madras (1 July 1843) followed the Bank of Bengal.