The Guinness World Record for the farthest distance for stone skimming is almost 400 ft by a Scotsman named Dougie Isaacs. That stone likely sent multiple ripples along its path. Similarly, we find ripples can be felt along the digital global payment system when glitches or outages occur. One such event happened recently.During one recent appearance before Congress, Fed Chairman Powell was briefing members about the government’s digital payment system, and how important this year would be to its continued development. As he spoke, the Fed’s system was disrupted for about four hours due to an apparent internal hiccup. Apart from the irony of the timing, this event provided a lesson in the importance of robust business continuity plans (BCP) to deal with disruptions in the digital age.Review and shore up continuity plans Being prepared for a disaster is part of every community financial institution’s (CFIs) playbook. Yet, often those plans are long on what to do during natural disasters — floods, tornados, hurricanes, snowstorms, fires — and shorter on dealing with more digital challenges. But with something like digital payments, where the Fed’s ACH system processes some 62MM transactions a day, a disruption can rattle a financial institution of any size. As a brief reminder, here are the salient steps to take, as you review digital dangers and incorporate steps to mitigate these dangers.
- Identify the scope of the plan
- Identify key business areas
- Identify critical functions
- Identify dependencies between various business areas and functions
- Determine acceptable downtime for each critical function
- Create a plan to maintain operations
Remember to think about your vendors and how you are connected to these partners remotely. This could lead to other disruptions or ripple-effect interruptions in the future. Make sure that you have appropriate plans in place, with regard to the activities or services that your core provider and other third-party vendors provide. Incorporate any updates in your BCP plan regarding your use of their services and check with them regularly for any changes to their plans. On the flip side, these service providers could also serve as important backup for you, if their systems are not affected in the same way or the disruption is somehow only localized.
Communication planning is critical In order to notify your customers in a timely way of any digital glitches, the right communication strategies need to be in place, as part of your BCP. Who should lead the communication plan? Which departments should be included as team members? It makes sense to include those that deal directly with customers, but also those in operations should likely have a place on the team. How often should these communications go out? There also needs to be a clearly defined plan for how the response will be structured and distributed. Having a template in place to build on could save time and ensure that the essential information is included. Finally, this plan needs to be tested to make sure it works before the disruption happens. Then, when an ACH interruption happens, bankers know what needs to be done. They can be ready with rapid response communications alerting customers immediately and seamlessly. This should include the nature of the crash, its origins, and how widespread it is. With an ACH outage, a CFI needs to make clear to customers that the disruption is national, out of the scope of the individual institution, and that the institution is closely monitoring the situation and will post transactions as soon as possible. Those communications can take the form of emails, texts, or social media posts.As digital payment systems continue to expand, CFIs need to have their BCP updated to deal with these types of disruptions. Events such as the Fed’s recent system glitch serve as good prompts to keep those BCPs up-to-date and thoroughly tested. As a reminder, any institution that uses PCBB for payments is invited to take part in our annual test with the Fed as part of a BCP process. Just ask us for more information.
Communication planning is critical In order to notify your customers in a timely way of any digital glitches, the right communication strategies need to be in place, as part of your BCP. Who should lead the communication plan? Which departments should be included as team members? It makes sense to include those that deal directly with customers, but also those in operations should likely have a place on the team. How often should these communications go out? There also needs to be a clearly defined plan for how the response will be structured and distributed. Having a template in place to build on could save time and ensure that the essential information is included. Finally, this plan needs to be tested to make sure it works before the disruption happens. Then, when an ACH interruption happens, bankers know what needs to be done. They can be ready with rapid response communications alerting customers immediately and seamlessly. This should include the nature of the crash, its origins, and how widespread it is. With an ACH outage, a CFI needs to make clear to customers that the disruption is national, out of the scope of the individual institution, and that the institution is closely monitoring the situation and will post transactions as soon as possible. Those communications can take the form of emails, texts, or social media posts.As digital payment systems continue to expand, CFIs need to have their BCP updated to deal with these types of disruptions. Events such as the Fed’s recent system glitch serve as good prompts to keep those BCPs up-to-date and thoroughly tested. As a reminder, any institution that uses PCBB for payments is invited to take part in our annual test with the Fed as part of a BCP process. Just ask us for more information.
