Magazine article American Banker

Chemical's ATM Foul-Up Seen as Aberration

Magazine article American Banker

Chemical's ATM Foul-Up Seen as Aberration

Article excerpt

Computer glitches like the one that caused $15 million to be debited incorrectly from 100,000 Chemical Banking Corp. accounts last week are not common, say techologies.

But they do occur, raising questions about what measures banks can take to prevent massive mistakes in customer account servicing.

The computer glitch occurred in updated software Chemical uses to run its automated teller machine network. The problem caused ATMs to process transactions twice, so that customers were debited twice for withdrawals.

Situation of the magnitude are "not very common," according to Mark Hardie, technology analyst at Tower Group in Dover, Mass.

"One of the reasons this happened to Chemical was because they were trying to upgrade their portfolio of banking products, particularly their ATM networks," said Mr. Hardie.

He explained that banks don't often upgrade tried-and-true core banking software that runs on mainframe computers. But whenever new products and services are added, this software must be rejiggered, which can sometimes led to problems.

The Chemical glitch, for instance, was caused by a single line of programming code. Mr. Hardie, who is a former programmer, said ATM programs can have millions of lines of code, some of which remain dormant until new services are added. In Chemical's case, the programming line was supposed to be inactive until further changes to the system were made.+

Staff Cuts May Take Toll

Mr. Hardie said that problems with updating software are often exacerbated by staff cutbacks, a result of industry consolidation. …

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