“Quality is never an accident; it is always the result of high intention, sincere effort, intelligent direction and skillful execution; it represents the wise choice of many alternatives.”
– William A Foster, Former US Marine
One of Southeast Asia’s largest banks, DBS, Singapore suffered a major outage in its services on Wednesday 29th March 2023 when the digital banking and payment services of the bank were disrupted from 8:30 am to 5:30 pm (Singapore time). This incident follows an earlier similar incident where DBS Bank suffered a similar outage in November 2021.
So as a business why is it important to understand this incident?
Service outages can normally occur due to a variety of reasons however it is important to understand the impact they can have on an organization, especially if your organization is a service provider.
Let’s look at the two incidents which impacted DBS in the last two years and what were the consequences of the event.
DBS SERVICE OUTAGE 2021
"It is indeed very unfortunate and disappointing that something like this happened. In particular, we acknowledge that it is unacceptable that many of our customers faced issues logging into digibank services, when something of a similar nature happened 16 months ago," - Peter Seah, DBS Chairman
DBS Bank’s access control servers suffered a problem that resulted in the disruption of online banking services on November 23-25, 2021. Access control servers are basically a part of the bank’s security system. Login and payment verification are both handled by the access control servers.
Due to this outage, the Monetary Authority of Singapore (MAS) which is the central bank, and the financial regulatory authority of Singapore imposed a penalty on DBS Bank. MAS instructed DBS to set aside a capital requirement of another $930 million following the disruption.
The above-mentioned capital requirement is basically the amount of money to be set aside as a buffer to provide cover for unexpected losses and for the bank to maintain solvency. This requirement by the MAS will impact the capital ratios of the bank and that is not a good thing as capital ratios are used to measure the financial strength of a bank and its ability to withstand risks. Read about the news here. MAS took cognizance of the deficient incident and recovery procedures of the bank to restore its digital banking services to a normal state.
Coming to March 2023, DBS suffered its second outage in 16 months which was termed as unacceptable by MAS.
If DBS is penalized again by MAS, then it would not only have a huge impact on its reputation but will also impact its credibility not only among customers but also investors. Read about the news here.
WHAT ARE THE LEARNINGS FOR ANY BUSINESS?
“The real test is not whether you avoid this failure, because you won’t. It’s whether you let it harden or shame you into inaction, or whether you learn from it; whether you choose to persevere.” – Barack Obama, Former US President.
1. REPUTATIONAL IMPACT
For any company which provides products and services online, an outage of its services can have a very negative impact on its brand and reputation. Customers who are unable to access services may lose confidence in the organization. Rival organizations may take advantage of the situation and try to attract your customer base. The market may lose confidence in the organization and can drive investors away. Potential customers may not do business with the organization after observing the discontinuity in the organization’s operations. 2. LEGAL AND REGULATORY IMPACT
Post-incident if it is discovered after the investigation that the regulatory laws were not complied with, it could result in legal action being taken against the organization. It would cost the organization millions of dollars in fines and high legal fees which could be detrimental to the organization. If found guilty of violating domestic laws, the organization faces a risk of business closure in the location.
3. FINANCIAL IMPACT
As seen in the above example of DBS Bank, how regulatory authorities forced DBS bank to set aside money for contingency purposes as a penalty for the outage its customers faced is a prime example of how not taking business continuity seriously can impact your organization. A loss of service can deny the organization the financial gains which the customers can give by purchasing products if the online services were functional.
CONCLUSION
It is clear that Business Continuity needs to be paramount for organizations to ensure and secure themselves from the impact of the aforementioned causes. Imagine your organization’s online services are not functional, and by the time they are restored will you be able to restore the confidence in your customers? Wouldn’t customers find it difficult to trust you?
It is not that services can never be down; they can be, however, whether you have efficient recovery procedures in place ensure how quickly you restart operations.
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Image credit: Deyoadutrys, CC BY-SA 4.0 <https://creativecommons.org/licenses/by-sa/4.0>, via Wikimedia Commons