Magazine article American Banker

NationsBank ATM Glitch Underscores Merger Perils

Magazine article American Banker

NationsBank ATM Glitch Underscores Merger Perils

Article excerpt

About 800,000 NationsBank customers in Georgia lost their access to automated teller machines 10 days ago in the latest of a series of technology glitches to befall major retail banks.

Though NationsBank was able to restore service within a little more than 24 hours, its merger-related complication holds cautionary lessons for virtually all banks growing through acquisitions, according to technology experts.

"When you combine large banks, it's very difficult to test ahead of time all the possible things that can occur," said Robert Landry, an analyst with the Tower Group in Wellesley, Mass.

NationsBank Corp., which has had to manage multiple and incompatible systems at its far-flung subsidiaries, is in the midst of a complex effort to unify the infrastructure.

Its Georgia operation had recently converted Bank South Corp., an Atlanta holding company it acquired last year, to the NationsBank system. More than 400,000 Bank South customers were given new ATM cards.

Transaction attempts with those cards - and with those of all other NationsBank customers in Georgia - were denied between about noon on Friday, May 24, and mid-afternoon the next day.

Communications between the bank's computers and the Honor ATM network broke down, said NationsBank spokesman Scott Scredon.

Technology and marketing consultant Anne Moore, president of Synergistics Research Corp. in Atlanta, said such snafus cause more than short-term publicity damage: They lower confidence in all banks' customer service.

She pointed out that NationsBank's problem occurred just as it and two competitors, Atlanta-based units of First Union Corp. and Wachovia Corp., were gearing up to promote a futuristic smart card system tied in with the summer Olympics. "There's a shadow effect on other bank technology," she said.

Mr. Landry of Tower Group said banks' and consumers' growing technology dependence leaves them more vulnerable to large-scale, high-visibility problems than occurred in the era of manual processing. …

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