Botched IT upgrade cripples National Australia Bank

Over nineteen thousand National Australia Bank customers are still affected by the five-day computer glitch that has left millions short of cash.

A botched IT upgrade last week left the NAB’s payment system crippled resulting in chaos for the bank’s customers.

Pensioner and NAB customer Kevin Berthelsen said he had been left disillusioned with the bank after being unable to access his pension until yesterday.

“I have been a customer for 42 years and I am furious at the fact I could not get access to my pension.

“I am sure they did not have any issues with accepting people’s money,” Mr Berthelsen said.

One aspect of the computer glitch involved NAB accounts showing incorrect balances with transactions either duplicated or missing.

NAB customer Warwick Beddoes said his account was one of those affected by the computer failure.

“A few amounts have come out of my account and some amounts credited that are not mine,” Mr Beddoes said.

The bank was eventually able to sort out Mr Beddoes’ account issues.

“All the banks have made big profits so they should be able to sort out problems like this, and they have done so,” Mr Beddoes said.

Last year, the NAB posted a profit of $4.58 billion.

NAB Ruthven Street branch manager Zac McDermott was as much in the dark as some customers.

“We have not really been told or been updated on anything,” Mr McDermott said before referring The Chronicle to the bank’s media department.

NAB spokeswoman Meaghan Telford said the bank had “managed” to identify the problems over the weekend, but could not say when they would be fully rectified.

“We are still working on some account issues and at this stage we anticipate they will be fixed in the near future,” Ms Telford said.

NAB's horror hiccup comes as Australia's big banks wrestle with upgrades to their IT systems, and customers could face more glitches.

Local banks are either replacing or carrying out major updates to their so-called core banking systems, the computers and software which handle fundamental operations like deposit taking, payments and loans.

The NAB began its own billion-dollar core system upgrade project, called NextGen, in 2008, following the CBA which was the first of the four pillars to embark on a core banking system replacement project.

These fundamental computing systems often date back to the 1960s and 70s and have acquired an overlay of extra code to handle banking functions unheard of a generation ago, such as internet banking.

Banks treat major change to core banking systems with trepidation.

Not only are they expensive to replace, with IT transformation bills creeping into the billions, but given the main asset of a core banking system is reliability, playing around with core code can have unintended consequences.

Jorn Bettin, an adviser with IT consultancy International Business Research Services, said a big bank typically had several tens of millions of lines of code to maintain, with between 20 per cent and 50 per cent of it legacy code written in languages no longer taught in universities, such as Cobol. As the Cobol-trained programming workforce headed into retirement, the pool of knowledge around core banking systems was drying up, leaving banks increasingly exposed.

"We will see more such events," said Mr Bettin of NAB's recent woes. "There are plenty of accidents waiting to happen."

Mr Bettin said these incidents weakened trust in the banking industry.

"Incidents like the NAB system meltdown provide a beautiful illustration of the business case for replacing traditional code and system specifications by formal models," he said.

System problems were also likely to bedevil banks as they went about renewing their legacy systems, he said.

Software validation and testing standards were higher in healthcare and aviation and banks needed to lift their game, although he conceded the costs were high.

"The amounts needed to validate are really huge," he said.

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Two former Madoff employees arrested

Two former employees of disgraced financier Bernard Madoff have been arrested by the FBI in relation to his massive Ponzi scheme, according to FBI spokesman Jim Margolin.

Joann Crupi was arrested last night in New Jersey and Annette Bongiorno was taken into custody in Florida. Charges against the two will be announced later Thursday.

Madoff pleaded guilty in 2009 to 11 counts related to running the largest Ponzi scheme in history and was sentenced to 150 years in prison.

The arrests are just the latest in a series since Madoff's fraud collapsed in 2008. To date, two former executives, two computer programmers, and an accountant of Madoff's have faced charges. Frank DiPascali, Madoff's former finance chief, pleaded guilty to fraud charges in 2009.

The government had previously filed civil complaints against Bongiorno and Crupi, both longtime Madoff employees who worked as supervisors of his "back office" staff, seeking the forfeiture of millions of dollars worth of assets, including homes and luxury cars, that they allegedly received while involved in Madoff's scheme.

Google develops phone with Mobile-Wallet capability

Google recently revealed a new smartphone that includes a chip to let users make mobile payments by "waving" the device over a reader.

Google's CEO, Eric Schmidt, has confirmed this recently while giving a presentation at the Web 2.0 technology conference held in San Francisco. The device is powered by a new version of its Android mobile operating system, called "Gingerbread," which will include a payment processing tool.

"You will be able to take these mobile devices that will be able to do commerce," Schmidt said. "Essentially, bump for everything and eventually replace credit cards. In the industry it is referred to as tap-and-pay."

The handset features a near-field communication, or NFC, chip that allows phones to transmit data over very short distances. The transactions, which are conducted by tapping a phone against a physical sensor such as a payment terminal, are more secure than magnetic strips that are found on credit cards.

Schmidt said that the new device will be launched within the next few weeks, and that the company intended to partner with payment processors rather than try to expand into that sector.

The handset's name and manufacturer were concealed during the presentation, but many speculate that the new phone, dubbed the Nexus S, will be manufactured by Samsung.

The original Nexus One phone was unveiled at the beginning of the year with the intention of transferring power from carriers to users. But Google stopped selling the device due to low sales, especially with the array of Android-powered devices already on the market.

Android recently leapfrogged over the iPhone to become the world's number two smartphone operating system, and will power several tablet computers coming to market early next year.

With a new smartphone model with built-in mobile payment capabilities, Google not only takes another stab at making a game-changing device but extending its reach into other tech sectors.

Cambodia gives Mobitel until February to comply with mobile banking regulations

Cambodian mobile network operator, Mobitel has been given until next February to ensure its mobile money service complies with the Central Bank regulations. The mobile network is now required to seek a partner with a local bank to support the mobile money transfer service.

The Central Bank issued a ruling in August that it must oversee credit remittances - which it says includes the money transfer services provided by mobile networks.

The Cellcard Cash service which was launched in September without Central Bank approval after the network operator interpreted the regulations as not being applicable to its service. At the time, the mobile network's operations manager Kay Lot said that the company did not consider mobile-money transfers to be banking.

The GSMA, which helped fund the service was reported last month to have suspended grant payments, worth up to US$5 million, until the situation is resolved.

Remittances – Nigeria tops the Africa list for remittance receipts

Nigeria is ranked first among the top 10 remittance recipients in 2010 in sub Saharan Africa, according to the World Bank’s latest Migration and Remittances Factbook 2011 released this past week.

Nigeria received $10 billion from remittances, followed a distant second by Sudan, with $3.2 billion; Kenya, $1.8 billion; Senegal, $1.2 billion; and South Africa, $1 billion.

The report also listed Nigeria among the top 10 emigration countries in the region alongside Burkina Faso, Zimbabwe, Mozambique, Côte d’Ivoire, Mali, Sudan, Eritrea, the Democratic Republic of Congo, and South Africa.

The report described remittances to developing countries as a resilient source of external financing during the recent global financial crisis, with recorded flows expected to reach $325 billion by the end of this year, up from $307 billion in 2009. The report added that worldwide, remittance flows are expected to reach $440 billion by the end of this year.

The true size of remittances, including unrecorded flows through formal and informal channels, is believed to be larger.

Remittances to India are expected to reach $55 billion in 2010

Indian expatriates are expected to remit about $55 billion into the country this year as the number of emigrants from the nation is likely to reach 11.4 million, a new World Bank report saya. India is likely to stay as the top receiver of remittances in 2010, as inflows of $51 billion to China keeps it a place down, with Mexico in the third spot, is expecting $22.6 billion from its expatriates.

The World Bank in its 'Migration and Remittances Factbook 2011' report says that worldwide inflows are expected to reach $440 billion by the year end, with remittances to developing nations are likely to reach a record $325 billion from the 2009 figure of $307 billion.

The top remitting countries in 2009 were United States ($48.3 billion), Saudi Arabia ($26 billion), and Switzerland ($19.6 billion).

Remittances remained a resilient of external financing during the recent global financial crisis and were steady despite the pangs of financial reconstruction in the developed world, the report said.

As high-income countries remain the main source of remittance flows, migration to the developed economies grouping saw an increase.

India ranks second in the top three emigration countries with 11.4 million of its population chose overseas destinations. Mexico tops the chart with 11.9 million figure and Russia getting third position having 11.1 million people working in other countries.

India-UAE is among the top 10 migration corridors with 2.2 million migrants. Mexico-US is expected to be the largest migration corridor in the world, followed by Russia-Ukraine, Ukraine-Russia and Bangladesh-India.

World Bank said majority of expatriates in the Gulf hail from India, Pakistan, Sri Lanka, Egypt, Philippines, Bangladesh, Yemen, Iran and Sudan.

According to the Factbook 2011, the top migrant destination country remains the United States that kept 42.8 million immigrants, followed by Russia (12.3 million), Germany (10.8 million, Saudi Arabia (7.3 million), Canada (7.2 million), United Kingdom (7.0 million), Spain (6.9 million), France (6.7 million), Australia (5.5 million), India (5.4 million), Ukraine (5.3 million), Italy (4.5 million) and Pakistan (4.2 million).

The top immigration countries relative to population are Qatar - 87 per cent, Monaco - 72 per cent, UAE - 70 per cent, Kuwait - 69 per cent and Andorra - 64 per cent.