http://www.itpro.co.uk/blogs/editorial-blogs/chris-green/963958/northern-rock-and-how-the-internet-triggered-a-run-on-the-bank.thtml
Northern Rock, a British bank based in England had an online banking crisis. According to the article, their was an over-dose of people withdrawing their money through the website that resulted in a total of two billion pounds. In contrast, a total of two billion people went to there closest branches and demanding to get there money back, where the bank was running out of it, which stated “only a fraction has left via its branches.” The biggest drain of its disaster was that a large amount of people withdrew through the website.
Even-though a small fraction of people visited branches, a large fraction learned through the Internet that their were problems in he bank, and the immediately transferred/removed their money from their account. I can understand that there would be an unexpected breakout in the computer system, but I believe that their should be a back up server, or there should be a limit of number of people withdrawing at the same time, so that they would not exceed their capacity, or they can limit the amount of withdrawal.
For future recommendation, they have to improve their technology servers, I think they should increase high tech directors to improve their servers, and figure out their problem. If they had limit of amount of withdrawal their should be a notice that states that, so they could be in he save side.
Nevertheless, Northern Rock is running out of money, but they have a lot of duties ahead of them. They have to work out their server, which is very expensive. However, they have to work hard to rebuild up, and fix their problems to gain their reputation back.
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2 comments:
The Northern Rock situation says about about news on the Internet. How do you distinguish between important and unimportant. How can banks, or any organization, prepare for peak system usage. If we ignore the vastly complicated PR problem for a moment, it is likely that no disaster plan would have included the extraordinary transaction activity that occured. Planing for disasters is hard!
I think your article is very interesting, in that it shows how technology is equipping customers with more power to carry out their banking transactions. In the downside, it makes banks more vulnerable to run-on banking. However, they could reduce their cash outflow by controlling their online process with a go-slow approach, as mentioned in the article, which may be the reason why Northern Rock has technical difficulties or slow online transaction processing times.
I feel the government should have done more for the banking industry in the event they would face such crises. For example, they could insure the deposits for a more substantial amount so there would be less of an issue of a run-on bank.
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