Can CBA's IT hack it?

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Prolonged outages of the Commonwealth Bank's online banking service, NetBank, raise questions about the progress of the much touted $580 million transformation of CBA's core banking systems.

It also raises questions about whether or not changes made last year to the delivery of the bank's application services are running smoothly.

CBA yesterday blamed "network issues” for the closure of NetBank for most of the day. It did not elaborate except to say that the NetBank problems were not caused by a hacker attack.

There were reports CBA staff had told customers that system problems were commonplace at the end of the financial year.

There is no doubt that transactional banking activity spikes higher just before June 30. But that should not be an excuse for NetBank's 2.5 million customers not being able to access their accounts online.

NetBank is the most popular online banking website in Australia. CBA says it is one of the highest volume transaction websites in the Southern Hemisphere. NetBank connects into many CBA legacy systems.

It is those legacy systems that are the subject of a transformation program at CBA, announced last year. The bank has hired systems integrator Accenture to implement a new core banking system supplied by German software group SAP.

The $580 million project will allow the bank to process transactions in real time. It should cut the overall cost of running the bank's IT systems.

However, it is not without its risks. Large scale IT projects have a habit of going off the rails. Also, technology vendors have a habit of over-promising and under-delivering.

Long-time CBA watchers will never forget former chief executive David Murray's spray on this very topic at the World Congress on IT in Adelaide in 2002. He said many IT projects had failed at CBA because of cost and complexity.

Industry observers were yesterday pondering whether the latest problems with NetBank can be sheeted home to last year's decision to change the management of its application services. It dumped EDS in favour of a multi-sourcing approach.

After 10 years working with EDS, CBA opted for a multi-vendor panel that includes IBM and two Indian technology outsourcing specialists: HCL Technologies and Tata Consultancy.

EDS had a deep knowledge of how everything worked across CBA's applications portfolio. But of course, EDS was the company that had been in charge when CBA's internet banking operations caused problems under Murray's reign and prompted the IT staff to give the CEO daily reports on system stability.

Yesterday's problems at NetBank were not the first this month. The site went down for most of the day on Sunday June 21 after a system upgrade went wrong.

At that time, a CBA spokesman told Business Spectator the upgrade had taken longer than anticipated to implement, which meant some customers experienced difficulty accessing the site. The spokesman said periodic upgrades were essential to maintain service standards.

But that outage showed there have been problems in the works for some time.

A quick check of NetBank this morning showed that the problems with the system are continuing.

After logging on, the following official notice from the bank appeared: "We have identified that your running balance and some transactions (eg an ATM or branch withdrawal) are not displaying on some accounts such as Streamline or Debit MasterCard. This is currently being investigated as a high priority.” The bank apologised for the inconvenience.

It looks as though CBA has opted to offer customers a cut down version of NetBank in the interests of keeping the system running for the final day of the financial year.