In response to yet another banking outage over the weekend, the Monetary Authority of Singapore (MAS) yesterday said what many had expected, that it would take “appropriate supervisory actions” after investigations were completed.
To the public, the government regulator also reminded everyone that IT systems were not infallible. Perhaps more surprisingly, it advised people to have “alternative payment providers” and to carry some cash as a contingency.
Carry some cash? Do you mean that after all the efforts to go cashless in recent years, from making it costlier to issue cheques to having people scan QR codes at hawker centres, you still should have cash as backup?
That’s quite the humbling for an industry that has long pushed the cashless route as the enlightened way forward. The digital transformation that has been celebrated so often now needs a reality check.
To recap, the outage last Saturday knocked out DBS’ key consumer services. You could not pay with Nets or credit card, log in to the banking app or even withdraw cash at the ATM machine.
Perhaps that’s why the MAS has told everyone to have a few dollars in their wallet now as backup. Don’t just count on your phone app or a fancy tap-and-pay smartwatch app.
To be sure, cashless payment offers convenience and ease of use and should be the main way for people to transact. However, the other part of the equation has to hold up too – the banks need to ensure that the digital payment can go through.
Notably, MAS now says DBS and Citibank were not able to recover their systems within the required timeframe. The rules are clear – they are not supposed to have more than four hours of unscheduled downtime within a 12-month period.
Apparently, an issue with a cooling system at a data centre run by Equinix caused the downtime. This had occurred during a planned system upgrade.
As the MAS points out, no system is infallible. The question is how one breakdown can cause such a cascade of failure for critical digital systems that should be fault-tolerant.
Remember that the outage happened from 3pm on Saturday and services only fully resumed on Sunday morning. The long downtime makes you wonder about the resilience, when a single point of failure – the data centre – seems to be the issue.
So, what will happen next? The MAS might impose penalties on the banks, as it did earlier this year for another DBS outage, which the authorities had called “unacceptable”.
But beyond expressing its unhappiness, is it time for the regulator to be more prescriptive in its technical requirements?
Say, to tell the banks to have regularly audited contingency plans that reduce the risk of such a long and serious outage again?
It will be no surprise to hear banks talk up the cost of such investments. The answer to that is to remind them that they have reaped much from their digitalisation efforts, from shutting down branches to pushing people to faceless chatbots, so they need to bear some of that cost to reduce risk.
In its advice to consumers, MAS also said they should have alternative payment providers. If this is so, perhaps it’s time that banks got ranked on their uptime and performance.
Much like how the government telecom regulator puts out broadband and mobile performance statistics from operators in Singapore, publish all the downtime statistics from the major banks here.
Let consumers decide which banks offer the lowest risk of stranding them in a store, unable to pay for their stuff. Let the results speak for themselves.
Outages happen but onsumers need more than a “best effort” service from banks to gain trust in cashless, digital payment. If they are told to carry spare cash, just in case, how are they to believe it’s the best way forward?