HSBC’s core banking system has been hosed for almost a week, preventing thousands of customers from knowing how much money is stashed in their accounts. The widespread problem is limiting access to HSBCDirect accounts, and at least 8,000 Catholic Health System employees up in Buffalo are still waiting for their direct deposit payments to materialize.

The bank initially downplayed the issue, calling it an “infrastructure problem” or a “systems issue involving disks in our mainframe computer” that affected “certain applications.” In reality, it was much worse.

“It’s very serious to have your core system go down,” said Bart Narter, senior vice president of the banking group at technology research firm Celent. “It is a major technical failure.”

A bank’s core system is the back-office computer that keeps track of checking and other account balances and transactions. Many other bank systems, such as online banking and ATMs, rely on the information in that system. Other computer systems are unrelated.

“The core system is the system of record, the absolute arbiter of how much money you have and how much money you deposited today,” Narter said.

Most U. S. banks do not operate in “real time,” but rather keep computerized notes or “memos” of all transactions that occur during a given day, Narter said. At night, during a specified window when the bank shuts down, officials run the core program to update the accounts using “batches” of those transaction records. They then bring the system back up in the morning.

If the hard drive fails, the bank has to reboot and restore the system, and then rerun the overnight batches to catch up. That takes time at a big bank.

“This is a bank’s worst nightmare, to have the core banking system goes down,” he said. “That means any channel you go to, they’re running blind.”

The bank is keeping select upstate branches open late so Catholic Health System employees can come in and trade their pay stubs for cash. As for affected HSBCDirect customers, the bank promises to “return full–system functionality to you as soon as possible.”

HSBC’s issues mostly repaired, but cause still sought [The Buffalo News]
HSBC struggles with customer transactions after crash of computer system [The Buffalo News]
(Photo: Getty)

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