B2B Payments

Grasping The Big Picture Of The HSBC Outage

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Getting back to the grind after a few weeks of holiday fun and relaxation is tough for anyone. But for thousands of HSBC customers, the start of the new year was especially brutal as the bank’s online personal banking service was knocked offline amid technological glitches — a fiasco that lasted for two days and marked the second time in as many years that Europe’s largest bank found itself apologizing to customers for technological issues.

“We’re less than a week into 2016, and service-affecting problems have embarrassingly materialized yet again for HSBC, resulting in a predictable and near-identical set of reactions from those either directly or indirectly involved to those seen with similar failures last year,” stated Alex Kwiatkowski, senior strategist for banking software company Misys’ banking and digital channels operations.

Kwiatkowski made the remarks just one day after HSBC issued an apology for the fiasco. Consumer banking glitches often make headlines. But PYMNTS wanted to know: Would the reaction have been the same if HSBC’s breakdown happened within its SME or corporate banking operations?

Yes and no, Kwiatkowski recently said.

“You’ve had this digitization of payments in the retail world. In the B2B sphere, it still feels very analog,” he told PYMNTS. “I think that perhaps there is almost a lack of expectation that there is going to be this fantastic payments experience.”

Still, Kwiatkowski, who has a long professional history of researching and analyzing banking technologies, says that business clients would not have simply rolled over and accepted a blackout like the one HSBC just had.

“I think there would have been, as there should have been, an outpouring of frustration — of ‘why can’t we get this right, guys? It can’t be that difficult,’” he said. And while B2B payments remain a manual, paper-based process, meaning banking services are similarly outdated, Kwiatkowski declared, “It doesn’t make it right.”

That’s where there’s an opportunity in B2B payments among financial institutions, he argued.

Admittedly, it’s no easy task for a major bank to entirely overhaul its underlying infrastructure to provide more sophisticated digital banking solutions to its business customers. Kwiatkowski acknowledged the high overhead of resources and time on such a feat, as well as the regulatory implications of implementing technologies that lead to faster payments for businesses.

But his response to FIs weary of those challenges?

“Tough,” he said. “That’s just the reality. It’s a difficult situation to overcome, but rather than acknowledging it and not doing anything about it, let’s see some action behind the words. Otherwise, it ends up being hollow promises.”

While banks need to step up their game, Kwiatkowski added that businesses are going to have to step up their demands for better banking systems, too.

“That doesn’t mean we’ll have to say farewell to the check, which some industries or businesses still have a comfort factor around,” he noted. “You can start to make improvements to make the banking process so much faster.”

Gradual incremental change is key to improving the banking experience of a business customer, he added. The technology is there, and it’s time for these banks to use it.

“There has been too much acceptance of mediocrity,” he said. “And certainly, in the B2B sphere, it has been almost overlooked in the clamor to get banks wrapped around retail payments.”

[bctt tweet=”‘There has been too much acceptance of mediocrity.'”]

Luckily, Kwiatkowski added, the business community is starting to show signs of greater desire for better banking tools and services. He explained that that desire will likely continue to grow but that banking mishaps and technology breakdowns, like the one HSBC just experienced, will also help push the corporate banking sector over the edge into no longer accepting the legacy systems in place today. It’s not a matter of if this breakdown will occur, it’s a matter of when.

“It’s not the first time it’s happened to HSBC,” he said. “And it sure as hell won’t be the last.”

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New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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