Japan banks to compensate customers for record system outage

JAPANESE banks will compensate customers for costs they incurred in connection with the record two-day outage that hit the domestic fund transfer system last week.

Zengin-Net, the system’s operator, said member banks will reimburse customers for extra fees and penalties incurred from the delay in money remittance.

“We would like to apologise for causing massive troubles and anxiety for many depositors, financial institutions and others,” Matsuo Tsuji, representative director at Zengin-Net, also known as the Japanese Banks’ Payment Clearing Network, told reporters on Wednesday (Oct 18).

Last week’s outage was the worst in the system’s 50-year history, affecting more than 2 million outbound remittances from MUFG Bank and nine others. The operator had initially said 11 lenders were affected but later corrected the number. The glitch also disrupted transactions at other banks since they couldn’t send money to those affected.

Tsuji said his organisation will submit a report on causes, risk management and prevention measures to the Financial Services Agency by the end of November.

The outage happened after the replacement of relay computers that connect banks and the system, he said. The computers stopped functioning after errors in processing interbank transaction fees, Tsuji added.

The Zengin System handles about 9 million transactions worth 14 trillion yen (S$1.3 trillion) every day. Prior to the incident, the operator boasted of the reliability of the system, saying it had never experienced major troubles since it started in 1973. Zengin-Net is affiliated with the Japanese Bankers Association. BLOOMBERG