The thing you have to remember about banking is that it's a confidence trick. As with all such things, once the confidence is gone the trick no longer works. That's what should be worrying the executives at NatWest and RBS over the shambles in their computer systems this week. As to what actually caused the problems, I'm …
The only time I did it, they transferred SOME of my direct debits, but I didn't realise one had gone missing until Vodafone cut me off. Vodafone didn't contact me to tell me why, either.
So I ended up having to move bank again and change mobile networks.
Another partial success.
When I transferred my ISA out of NatWest I decided to also close the current and savings accounts that I'd stopped using a few years ago.
I popped into my branch, told the chap behind the desk I wanted to close the account as I didn't need it any more and without any fuss he opened up his Intranet account management pages in IE6 and sorted it all out. I just needed to stick my card in the reader and enter my PIN a couple of times.
>I just needed to stick my card in the reader and enter my PIN a couple of times.
Ah, the PIN. I don't use anything that needs a PIN so never bother even remembering them. When i went to close an account at the Halifax they required that I put in my card and enter the PIN: I am there in person with various forms of ID yet they still want the card and PIN. Fortunately the "girl" at the desk was a lady of advanced years, probably filling some sort of quota, and she had the same attitude as me. We agreed that I'd lost the card and though it took bit of faffing about over a friendly chat she eventually managed to close the account.
It's a payroll thing.
Money coming out of the account I can handle myself. Direct debits, standing orders etc, piece of cake, no problems.
Sadly / fortunately / otherwise, money coming _into_ the account is mostly dealt with by our company's payroll contractor (whomever that might be today). Changing those details is a balls ache process of filling in about five separate forms, including chapter and verse on proving who I am and that the new account is legitimately mine. Sure I understand why they want these levels of surety, and I want them too, don't want my salary accidentally ending up with someone else, but the fact remains, its a total pain.
For that reason, I change banks only when I change jobs.
Beer, because I feel I need one now just thinking about it... and for the lack of a very generous single malt icon.
Isn't it Santander that will let you easily open accounts online, but requires you to personally go into a branch to close them again? And it seems to take them 15minutes to do it, all the while the queue is growing...
These guys deserve to have loads of accounts with £0.00 balance sitting around. Trouble is it becomes a PITA when it comes to chasing them all up for nil-interest certificates for tax-returns. While Nationwide can get their interest certs done within a month or so of the end of the tax year, Halifax (who I gladly no longer bank with) and Santander (reluctant customer) are normally still dragging their heels in July...
Have you ever been asked by HMRC for an actual nil-interest certificate on an account with a negligible balance? If they did ask me, I'd say that the account had a negligible balance and that I'd happily surrender all money in the account to HMG if they could only accomplish what I could not -- persuade the bank to close the accursed thing.
I've never been asked for a certificate at all. I ask for or print, and keep, the ones representing significant sums of interest just in case, but I reckon even HMRC has better things to do with its time than ask for proof that I really did have all the tax I owe deducted from 55p or 5p or 0p of interest.
Oh, hang on a minute. Your average test department isn't all that well resourced in terms of people, training or tools. They're really just a lip service; people to blame when things go wrong and a nice box to tick when the ISO auditors visit.
AC: Because one's employer would know exactly who one is having a dig at, if they saw one's name.
Don't you know that banking errors only work in the banks favour. If anything your mortgage would double and you'd spend the next fifty years trying to convinve the bank that they made an error which they won't listen to because they never make errors and all their security measure to ensure so are infallible.
"...engineer a similar crisis at another bank this week."
The banking sector has deployed so much incompetence recently that there is a danger that their incompetence reserves might run low. Fortunately, they can always borrow some incompetence from another bank. Some people think that banks create incompetence out of nothing but this is not really true. Some chief executives are paid huge bonuses for their incompetence, and...
You touch upon an important philosophical point:
Is there a finite amount of incompetence in the universe? And if so, we've been chewing through a lot of it of late. What happens when it has all been used up? Do things suddenly go right, or does time freeze? What will politicians do for a living if the banks have have used up all the incompetence? Is incompetence a fundamental part of the fabric of the universe? Indeed, is incompetence what scientists have been foolishly searching for under the guise of "dark matter"? Does incompetence have mass, and therefore attraction - certainly it appears to cluster. Is the Higgs boson merely a typo - they haven't found it because it isn't a boson they should be looking for, but in fact a bozo...
I submit my thesis for the Nobel prize for Physics, with the final piece of the Standard Model: The universe is held together by the mutually attractive force of the sub atomic particle of incompetence, the Hester bozo, which has been proven to have a mass of 37 Giga Quid.
Google "Quantum Bogodynamics"
there's also a joke paper from CERN out there about Quantum Indeterminacy applied to banking. One observation is that it's impossible to know the precise ownership and value of anything at the same time. The value is certain at the time an entity is sold, but the ownership is highly indeterminate. On the other hand if it's been in the family for generations the ownership is near-certain, but no-one has much idea what it's worth.
And I've just realized that there may be an explanation for the biggest wrong number in physics, that discrepancy of the order of 10^113 (give or take a few) between the observed energy density of the vacuum and the values predicted by all Theories of Everything to date.
The universe is the most successful Ponzi scheme of all time, but no-one has rumbled it yet.
Oh dear ... I predict the End of Everything starts about n
Interesting article, but there are some points that have gone unaddressed.
The fact that this won't break RBS is worse than if that were possible. With it's hand firmly in the pockets of taxpayers, RBS has no incentive to clean up its act. It can just treat this as a 'little glitch', shrug its shoulders and move on. If that is what happens, and I think it likely given the lack of government response to the situation, then the current disaster can - and probably will - happen again. Will bank 'outages' become the new norm? It's possible. After all, people have been told they will have to put up with standpipes, higher energy bills, higher petrol costs, and lower wages. More to the point, people *have* put up with these things. They have also put up with all the security theatre at airports, the increasingly potholed roads, appalling train service, political correctness, and MPs writing their own expense rules. Certainly, from time to time, they may make a bit of noise, but nothing has been done. Things continue to grow worse and nothing is done. The same could happen with the banks.
The problem with the banks might not be solved, but people will come up with a workaround if these 'outages' keep happening, or, at least, if people think them likely to happen. People will start stuffing their mattresses with money. A few will buy gold, but, mostly, people will start to keep their money out of the banks. That will make them feel safe. They won't be safe, but that's beside the point.
Will the government just stand by while people try to live as much as possible without banks? I don't think so. Most likely it will make the government work harder to institute a cashless society. The government in the UK, after all, thinks cash is evil. If one is using cash, one must be a terrorist or a drug dealer, or, even worse, one must be attempting to evade taxes. Can't have the little people doing that, can we?
Will people put up with a cashless society? Possibly, if they can find a workaround. If the euro still exists, they might import them from the Continent, for example, and create their own shadow economy. They might form barter networks. Whatever workaround is chosen, it will work until it doesn't. Then that's when chaos starts to *really* happen. Technology can allow you to build right up to the 1 year flood mark, and for a time, everything is fine, but when it really floods, when it gets past the barriers, the damage will be much greater than if normal safety procedures were in place, that is procedures in place before the enabling technology existed.
So, while in the short term, thinks might not go badly for RBS, or too badly for the UK, all that is it is doing is storing up problems for the future. Après moi, le déluge and all that.
Modern Banks are effectively state legalised and camouflaged fraud (fractional reserve debt) and embezzling (usury) gangsters; these predators are such an established part of society, and most people have insufficient financial education to comprehend their true nature, that they are accepted by most without question.
The banks and states are discovering that their respective prey are becoming less due to excessive predation by them, so are being forced to scaling back their greedy consumption far faster than they can cope, so damage like this occurs.
This bank should never have been bailed out, it should have been put in private receivership and sold off; yes, this may have caused some pain, but it would have been far less painful that the far worse pain to come!
True, credit is not money, because real money must have a known value which does not require trust (e.g. precious metals); we currently have effectively interchangeable fiat currency and credit, of nominal paper value, but effectively worthless if trust evaporates.
Fractional Reserve Debt (yes, created out of thin air, currency) is not a fairy story, but a toxic worldwide Ponzi scam of exponentially compounded debt and usury; it is effectively Secoinage on steroids, and is inherently unstable.
...... with Increasing Attacks and SQL Squirmishes. It is only natural when exercising and discovering new phorms of intelligence are available, and freely flowing to the masses.
"RBS IT cockup: This sort of thing can destroy a bank, normally" ….. Tim Worstall
Quite so, Tim, and it would also normally immediately have a devastating effect upon its share/stock price with a feeding frenzy on those dodgy markets. That appears not to have happened in this peculiar and particular RBS case?
Does that tell one and all that the banking and markets and media systems are rigged and are not a free market economy reflective of successful capitalism/mercantalism but are in fact, just part of a fiction driven by inventing wealth which is just based upon myths, which would all confirm, would it not, exactly that which you don't want to hear about, which would be the truth, which is hardly irrelevant? …….. " No, please, I don't want to hear anything about 100 per cent reserve banking, or the way that banks create money out of thin air. Whether all of this is true or not (it isn't, the banking system as a whole creates credit, not an individual bank's money) is irrelevant. Whether or not we achieve maturity transformation by banks, their purpose, the confidence fairy problem nevertheless continues to exist and RBS faces exactly the problems outlined above."
Build anything upon anything which seeks to hide, and must hide the truth to survive and prosper, and every system associated with it will fail catastrophically, very quickly, once even the tiniest part of it is perceived/suspected/proven to be a part of the fraudulent whole. Then does one have the unstoppable beginnings of an ugly black hole event which disappears/reveals all, rather than it being part of any sort of elegant black swan event
Such corrupted systems are turkeys, and it is Xmas and Thanksgiving with every passing zeroday for them, as their IT systems administrations battle to contain the raging contagion within and which which they cannot treat and root out because it is the lifeblood of their compromised immune systems.
Blessed relief and salvation though is just a simply complex matter of inventing another, but considerably better, Beta Fiction, but that does require considerably more and much better intelligence than crashed and crashing systems administrations/CIOs/CEOs/Power Elites have shown they do not possess. It is easily bought in though at whatever confidential cost would be quoted by anything which would be recognised as exercising competence in such a field of many fields, for there are many cointerindependent internetworking disciplines to coordinate and reprogram in what is really a Global Virtual Rebuild rather than Systems Repair/Reboot/Restore.
Having worked in IT in a non-UK bank, my guess is that all the banks are held together with spit and an elastic band.
DR kit is always under-resourced or merged with the test environment or some such thing. There are far too many custom data interfaces which don't have any DR and can't be failed over, so the bank never does a full DR test and it never does a full test in the test environment.
I've seen whole sections of a bank run on ancient flat-file databases where the db vendor and the db app developer went out of business over a decade ago. I've seen plenty of "here's our DR app server - it connects to the "master" db back at the main data-centre."
The prevailing attitude is "its mission critical, don't touch it" rather than, "its mission critical, make sure you have the documented the business logic and can reproduce it." If DR is substandard, don't implement it until you've got financial sign-off for remediation.
Part of the problem is that we demand so much from "enterprise" systems in terms of flexibility, that we fail to implement what is important. You need a proper working DR which is regularly and frequently tested. If that's scary, it should be a sign that your DR isn't up to standard. If internal personnel don't have faith in what is going on, why should i? Perhaps working and demonstrable DR should be a requirement of a banking license?
For the individual, what's the lesson? Get multiple bank accounts, get a credit card, even if you don't think you need it. Trust no one. Check your own single points of failure.
Im with RBS at the moment, have been since well before the government bailouts, but will be moving to another bank (probably COOP) within the next 12 months anyway. Not because of the screws ups at RBS last week but because they are going to sell my account to Santander who i hate with a passion and don't want to give a penny of my money to.
At the end of any project / incident I'm asked to do a summary of what went on and what lessons can be learned so here goes:
We lent money we didn't have to people who couldn't pay it back and then sold their debt to people who couldn't pay it and used the money they hadn't paid us to lend to people who couldn't pay.
We realised we had no money and asked the tax man. He was very kind and gave us the money. Lesson learned here, it's ok to mess up if you're big enough.
We then had to think up a way of cutting costs to pay back the tax man so decided to remove all the expensive things like quality, skill, experience and training and then rubbed salt into the wounds of the tax payer by sending all their jobs out of the UK to people who don't speak English as a first language, can't empathise with a customer and have a circa 6 month tenure at best, making it impossible to train or gain experience.
Then a system breaks and no-one can get their money, meaning no-one has any money. And we're back where we were 3 years ago.
Did you mean to say, in place of …. "We lent money we didn't have to people who couldn't pay it back and then sold their debt to people who couldn't pay it and used the money they hadn't paid us to lend to people who couldn't pay." .... the rather more accurate reality descriptor of ….. They lent money they didn't have to people who couldn't pay it back and then sold their debt to people who couldn't collect and profit on it, and used the money to enrich themselves rather than lend and/or give it back to the people who couldn't pay and weren't paid in the debt sales.
And their madness is that they think there will be no ruinous price that they will personally have to pay, now that the system is realising their scams are endemic and foolishly designed to perform in a such a sub-prime fashion, again and again and again because they never ever imagined their system would be rumbled and tumble.
And now that the codes have been cracked and their practices hacked, and the world is being made aware of the shenanigans, do they have a real major problem which is getting ever bigger every day that it is not solved, with the corrupt leading system replaced wholesale with something else different and better.
The problem is at the head and the heart of the operation, which is rotten to its cores, and has nothing at all to really do with the body of the system, which with enlightened novel administration would work exceedingly well.
This is a brilliant article and scratches on the tip of the real iceberg.
When you ask for a loan, the numbers are simply typed into a screen. In order for this scam to work, Banks must be in collusion with Governments.
Thus every country has a Central Bank in the US it's the Federal Reserve, in England the Bank of England, Germany - Bundesbank. these act as "guarantors". The BIS (Bank of International Settlements ) in Switzerland is the biggest "clearing house "for this.
For more detailed information, see Thrive the movie - http://www.thrivemovement.com/the_movie
STOP THE WORLD - YOU ARE MISSING THE EVIDENCE OF THE PAST
One thing that is missed by all is that a similar event happened at Royal Bank of Canada about 7 years ago. RBC is "the" biggest bank in Canada so it was a very serious matter. I worked for them at the time, although not on the retail side.
The issues and stories about impacts and the overtime working by staff are exactly the same for Natwest as they were for RBC back then.
Yes it damaged the reputation ofg RBC but that was soon recovered. I suspect that some accounts were moved. Looking at the bank now it is one of the safest and well run in the world. it is certainly seems to be skirting the credit crises very well. RBC is impacted but then all banks are impacted.
We need to step back, and realise that this will blow over and life will will go on.
Yes, it does happen with a certain periodicity.
But were RBC already in trouble for such poor lending and M&A practices that they'd bankrupted themselves and been bailed out by the state? Were they already on the hook for paying huge bonuses but no dividends? Was their corporate arm associated with malpractice? Had they systematically worked to export as many Candian jobs as they could? Were they handing over unwilling customers to a foreign bank itself looking distinctly needy? Were the directors of RBC the fattest, most useless cats in all of corporate Canada?
I love how you conclude "No, please, I don't want to hear anything about 100 per cent reserve banking, or the way that banks create money out of thin air. Whether all of this is true or not (it isn't, the banking system as a whole creates credit, not an individual bank's money) is irrelevant"
Because pushing aside what would show that your reasoning is, in current banking reality, partial is not making a good point for your analysis.
Bank do create "money" (not value) out of 'thin air' (scriptures) and the liquidity ratio is one thing, but the debt to capital ratio is another one and much more important.
If 100% of your debt is capital somewhere there is a good chance another bank can lend you liquidities to cover a bank run. That bank ru would then dry up probably by itself since the fear would be unfounded : people get their money back, the bank run-ed bank get less profit or some small (interests) debt.
Now if you are a bank this an abysmal debt/capital ratio : i.e you have created scriptural debt much over what you can truly either access or own from you own resources then the bank run is a completely different beast. Because the confidence your customers had in you WAS unfounded, you were just hoping there will not be a bank run .... and that is exactly the trouble with the banking system.
I would like to had that since the banking system privatized the money creation power by lobbying for central bank "independence" a major regulating tool for nation and states, the loonies are in charge.
P.S. : central bank independence does not mean that those "central bank" can set their policies as independent power separate from judicial, legislative and executive (that idea is already troubling to me, as if economy had an existence outside the body politics and society but I digress), no the real meaning of "independent central banks" is that they are now forbidden to use the state treasury as a guarantee, they can't make them print money to lend, in simple term. They are then mostly running on the same "flawed confidence" system as private banks.
To me the whole piece is interesting as another demonstration of taking one thing for another : talking about what bank **should be about** while being blind about what they are truly about now.
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