In my last two blogs I looked at ways in which information systems benefited environments outside the business organization. I explored the use of information systems in crisis management and in helping to prevent crime, however, while thinking of something to research in order to write this blog, I remembered the huge technology failure that hindered the popularity of Ulster Bank and I began to question whether some organizations are relying too heavily on technology.
Over the past number of years, the growing trend of information systems has changed the way in which firms operate; however, the importance of these systems is only highlighted when failure arises. This was certainly the case for Ulster Bank who lost valuable customers due to the huge systems failure.
In June 2012, Ulster bank was faced with enormous problems when their information system crashed leaving 236 branches without functioning systems. Electronic payments made by third parties into customer accounts were not updated by the system, leaving numerous current accounts short money. The accessibility of funds was also inhibited as several ATM’s across the country failed to dispense funds to the customer. 60,000 people had to wait up to two weeks to receive their social welfare payments.
Due to the complexity of the information system, it took a full week to repair. The bank was faced with an unprecedented number of transactions and it therefore took over 2 weeks for the system to be fully restored. The bank had to prioritise credit payments, standing order and direct debit transactions in order to prevent customers from defaulting on payments.
Bank of Ireland was also affected by their reliance on its electronic payments system in December 2010 leading to disruptions to online and internet banking.
The failure of information systems in the banking sector has clearly had severe negative effects on the firms in question. The example of Ulster Bank proves that while information systems may make the organization more efficient, breakdowns in these systems can cause huge disruptions and organizations should perhaps look at strategies to ensure that breakdowns in systems don’t affect the firms operations.