Banking Review

Glitches and tweets

NAB’s recent batch processing failure had a big impact on customers.
It was also a test for the bank’s relatively new social media service team

BY ELTON CANE

The failure of NAB’s batch payments processing and subsequent transaction delays and duplication for customers was big news in late November. It put the bank into crisis management mode. And while the technical nature of the underlying problem is not in the public domain, the way the bank responded – including its use of social media for crisis management – certainly is.

While social media only played a small part of the strategy NAB implemented to communicate with customers and media during the crisis, it makes for an interesting case study about what worked well and what could have been done better.

NAB’s Twitter account is its main foray into the world of social media. It does have a Facebook group, set up for employees and customers, but this is not promoted and comes with a disclaimer that it is not monitored by any customer service teams at NAB. It has just 873 members.

From NAB’s first tweet about the payment processing delay on the morning of Thursday 25 November, through to Monday 6 December, the Twitter customer service team posted 256 tweets. Twenty-five of these were general update notices, communicating the latest about when backlogs were expected to be cleared, timelines for dealing with duplicate transactions, weekend branch opening times and compensation processes.

The remainder of the tweets were reactive, dealing with 140 different customers who had expressed their annoyance at NAB’s problem. Many of these customer interactions developed from an initial response to a complaint by NAB, an invitation to follow the NAB account so the service team could direct message (DM) the complainant, and sometimes ‘Glad we could help’ or ‘Thanks for your understanding’ messages to conclude.

Putting the numbers into context
The 140 customers NAB dealt with via Twitter over the course of the problem pales into insignificance when you consider NAB has about four million customers in Australia. And the number is even quite low when you consider that NAB’s Twitter account has 2,034 followers, the majority of whom are presumably Twitter-savvy customers who were affected by the glitch.

An individual customer service agent in a call centre, or a suburban branch teller probably dealt with as many customers in the same period. But what makes the social media channel different, if used well, is its transparency and the potential for using the network effect to have a bigger communicative and reputational impact than the base numbers would suggest.

Criticisms of NAB’s response
Tracking customer sentiment in online comments on news websites, Facebook status updates and tweets throughout the problem period, showed that customers weren’t just annoyed about the transaction delays. Particularly over the first few days there was a lot of criticism about a perceived lack of effective communication from NAB.

The first public acknowledgement of the batch processing failure came not from NAB, but from its direct banking subsidiary UBank, which has a much stronger online and social media focus. On its Facebook group, it alerted customers at 7.20pm on Wednesday 24 November that there was a problem with payments not being processed on time.

It wasn’t until the following morning that NAB acknowledged to the media there was a problem, and that many government and private sector payrolls that are usually processed on a Wednesday night were not completed. This was backed up with an apology from CEO Cameron Clyne at a lunchtime event that had press in attendance.

A message to the bank’s Twitter followers was posted on the Thursday morning saying to customers that accounts may not be updated until later that day. But it wasn’t until later that afternoon that a message went up on the NAB website. In the meantime, the call centre was inundated and customers began complaining about lengthy wait times, only to be given very little information when they did get through.

“From the outside in, it looked like there was a lack of coordination internally, perhaps escalation points weren’t effectively agreed,” says Kate Carruthers, a senior consultant with Headshift Australasia. “There seemed to be a lack of effective outbound communications at first, and what was there wasn’t particularly well joined up.

“It’s not the first time NAB has had a crisis, so you would think they would be better at it. But monitoring talkback radio in the first couple of days, there was just confusion and no one had any good information.”

Adam Allan of business consultancy Strategical says banks have minor IT issues and outages all the time, and they usually get resolved without major mainstream press coverage. “I would be surprised if they didn’t have escalation procedures in place. But it’s not always immediately apparent with this kind of thing how serious a problem is going to be.”

“In working out how well they did, it’s worth looking at the number of channels available to NAB – call centre, branch, ATM, online banking messages and alerts, corporate website, SMS, Twitter and other social media, mainstream press outreach etc, to see what was used and how they were coordinated.”

Allan points out that if customers have been asked to provide a range of contact details, they get upset when they’re not kept informed. For example, customers who have set up SMS for securing online payments and receiving fraud alerts could reasonably have been expecting alerts about payment delays via this channel too. Customers are less likely to be annoyed by alerts about a potential transaction delay than a random marketing message – even if they have opted in to receive the marketing message.

“However, the opening of branches over the weekend to help customers with transaction queries and cash advances was definitely a positive move,” he says.

In its use of social media, both Allan and Carruthers agree that NAB seems very reactive.

“But they are not alone in this,” says Allan. “Most of the large banks in Australia have taken this low-key approach. For example, only UBank actually advertises its social media links from its main corporate website. NAB’s use of Twitter seems to entail waiting for a customer to complain and then telling them to follow @NAB so they can receive a direct message from the customer service representative.”

While this approach might suffice during regular business operation to serve customers’ needs, Carruthers says a different mode is needed during times of crisis.

Opportunities for improvement
NAB was contacted for this article to discuss what the bank has learned from its experience of managing this crisis and more broadly its use of social media. Through the communications team, Chris Smith, general manager of Digital, Direct Banking, confirmed only that official accounts, serviced by its dedicated social media team, have been created on Twitter and YouTube.

“We decided to activate the @nab Twitter account earlier this year and, particularly over the last weeks, it has allowed us to talk to our customers, respond to their questions as well as provide support to the broader NAB Customer Feedback & Resolutions team,” he said.

Carruthers says that NAB missed a few tricks that would have enabled it to more effectively use the social media channels during the crisis management period.

“To start with, they could have encouraged customers to re-tweet how NAB dealt with their problems, or what NAB’s response was to a particular question,” she says. “Banks are like STDs, there’s every chance someone you know banks with NAB. So if the bank gets you to tweet something along the lines of, ‘Just got a response from @NAB on twitter re: duplicate transactions. Should be sorted 2morrow’. Or even share a status update or response with people via word of mouth, email or whatever, that’s leveraging the network effect.”

When the Icelandic volcano disrupted global air travel in April, airlines such as KLM and Lufthansa, and EuroControl, the European air safety organisation, were rapid adopters of Twitter as an update and customer service tool, and eventually got customers themselves using the hashtag #ashtag to retweet, share updates and their own experiences.

Major airlines such as SAS and Virgin Atlantic also used their Facebook pages to excellent effect for customer service and updates during the crisis.

More than 50 per cent of people in Australia have a Facebook account, and using a sentiment engine such as Tweetfeel shows that a large proportion of negative comments about NAB being shared on social media were on Facebook. And these went unaddressed.

Even without embracing Facebook, Carruthers points out that NAB could have used its employees – presumably at least 50 per cent of whom have a Facebook account – to spread the word more effectively. “If they encouraged their staff to re-post or share links to the latest update on the NAB website, then the word would have spread more widely to friends and family of employees, who would view them as a trusted source.”

Most of the 140-plus customers that NAB dealt with via Twitter as it worked through the payments backlogs, updated accounts and processed compensation claims, were probably happy with the service they received. In the end, more effective use of social media could have helped NAB cut down some of the demands on its branch and call centre staff, and provide an opportunity for better relationships in future with even more of its customers.

Customers question time to settlement

When payments are delayed for whatever reason, customers are obviously upset. But it also gets them questioning why interbank payments take three days even when things are working well? In their minds, having become used to the real-time wonders of the internet, modern computing technology should make funds transfers near instantaneous. They suspect that the banks are holding on to the settlement delay in order to make money from the float.

This was, in fact, the finding of the Office of the Fair Trading in the UK, which established a Payment Systems Taskforce to address the issue in 2005. This led to the Faster Payments scheme, which launched in 2008 and offers real-time transfers between any UK banks’ accounts for values less than £10,000.

But switching to real-time settlement systems for low-value consumer payments is not a trivial move for banks and the infrastructure they rely on. And the failure of batch processing on NAB’s mainframe environment highlights some of the challenges banks in Australia currently face, even with the introduction of the new Community of Interest Network (COIN) that began replacing existing bilateral settlement links between Australian banks from March 2010.

Mike Aston, CEO of Distra, which provided some of the underlying technology for the UK’s Faster Payments scheme, says the very nature of batch processing makes error detection, reaction and correction very difficult and time consuming. “By way of analogy, if you took a large sack of rice and at the end of the day started pouring it into a bucket, you might suddenly see there’s something being poured that’s not rice _ a weevil or whatever. But it’s impossible to back up and just pull out the weevil. Even if you spot it, the momentum means you can’t do much about it other than pouring the rice back into the sack and then sifting through it by hand to find the weevils. And this takes time. Real time processing, on the other hand, is literally transferring the rice from the sack into the bucket, one grain of rice at a time. Weevils are easily detected and rejected.  The obvious burden of this approach however now being mitigated by very high speed.”

Despite this, the difficulty in changing core banking and accounting systems and processes means change has been slow.

“Faster Payments in the UK was driven by regulators. It probably would not  have been done voluntarily by the banks otherwise, at least not then. It’s been live for two years, so was first regulated about five years ago. But things have changed a bit now and the industry realises that they can’t rely on batch approaches forever,” he says. “Confidence in legacy systems is eroding.”

As competitive threats from alternative models to traditional banking and payments emerge that are not attached to or encumbered by legacy batch processing mindsets, customers who adopt them will increasingly expect payments to be real-time. As PayPal, Google, Apple and others all continue looking at ways of promoting open online payments mechanisms that don’t rely on established settlement systems, banks will have to do likewise.

If, as several industry analysts have predicted, more payment delays like NAB’s occur because of underinvestment, then banks will eventually be forced to fast track investment in payment operations and core banking systems that support real-time accounting.
Such large scale failures will also attract the attention of the RBA’s Payment Systems Board, and APCA will probably consider the likelihood of repeat occurrences in its strategic roadmap for low-value payments.