RBC combs through transactions following IT disruption

RBC Financial Group is resolving a “”processing disruption”” that occurred when one of its computer systems was being updated, but at least one banking industry observer said the situation could have been better handled.

RBC, which

deals with tens of millions of daily transactions, issued a press release late Wednesday stating some client transactions such as deposits, withdrawals and payments made from May 31 through June 2 weren’t reflected in client balances, but that customers’ money was secure.

It said although account balances for RBC clients now show transactions performed Monday and Tuesday, the bank will have verified transactions completed Wednesday by Friday morning.

RBC spokesman Chris Pepper said the problem stemmed from the software rather than resulted from human error, and RBC’s internal quality control procedures caught and fixed it. “”Now we’re just working with the backlog”” of transactions, he said.

Although Pepper said the data from the transactions was not lost, he refused to speculate about whether private customer information was compromised by a third party. He said a bank post-mortem would determine the number of transactions that were affected.

Paul Wing, a Toronto-based independent analyst who has 21 years of security and audit experience in the banking sector including a stint as head of information security at Scotiabank, questioned whether RBC’s debacle was merely a routine programming update.

“”I, as someone who’s been there, know what that means,”” he argued. “”But it can’t be routine if it had this sort of impact.””

In Wing’s experience, a routine programming update qualifies as changes to computer systems on scheduled dates, typically Friday or Sunday when there’s a low volume of transactions. He said processing problems tend to occur on a long weekend or at month’s end.

In all likelihood, said Wing, “”something routine went wrong –– a piece of testing didn’t get done that should have got done”” –– but RBC’s IT department will learn from the situation.

He said during his years in the industry, he’s seen scheduled system changes go through a cycle of three months of testing before they’re implemented.

Wing, who said he was unimpressed with RBC’s handling of the affair, said “”We need to question what information society is entitled to in this sort of situation, and whether or not we’ve got enough information about what really happened and what was the impact on the Royal Bank customers and other customers.

“”I don’t think it’s very clear to the lay person or the expert. I think they could have been a little more forthright without being explicit and giving away the secrets of their security design.””

Wing said the scope of problems have been better articulated in cases involving other financial institutions, but won’t comment on specific examples.

The RBC computer glitch has affected scores of people who in certain instances may have been closing a house purchase deal on June 1 but realized they didn’t have the money, he said.

Yet given the complexity of the banking system and the huge volume of electronic transactions, he said, it’s a testament to the strength of the system that these problems don’t happen more often.

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