Home big read The Big Read: With no foolproof way to prevent banking and e-payment services outages, what can businesses and consumers do?

The Big Read: With no foolproof way to prevent banking and e-payment services outages, what can businesses and consumers do?

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The Big Read: With no foolproof way to prevent banking and e-payment services outages, what can businesses and consumers do?
DBS Bank and Citibank digital banking and e-payments services were down for hours this month, following an issue at a data centre used by both banksSome consumers were caught off guard without cash or alternative means to pay, while affected businesses relied on an honour system and trusted their customers to pay laterDespite the risk of disruptions in e-payment systems, some businesses maintain that the benefits of going cashless far outweigh the cons Experts said while more can be done to prevent outages, there are no foolproof methods to ensure they won’t happenBoth businesses and consumers can adapt by adopting more payment modes to be more resilient and agile, they added

By Nikki Yeo Published October 27, 2023 Updated October 27, 2023 Bookmark Bookmark Share WhatsApp Telegram Facebook Twitter Email LinkedIn

SINGAPORE — A long-awaited date with her national serviceman boyfriend for Ms Nazrana Shaheen ended up being cut short, no thanks to a banking services disruption by DBS Bank and Citibank on Oct 14.

The 20-year-old social media executive and her boyfriend both tried to use their DBS Bank debit cards to pay for their meal at Ngee Ann City but were left embarrassed as their payment attempts failed. 

“We checked for the nearest ATM (automated teller machine) to withdraw cash, thinking that it was just digital services being down, but we reached the machine only to find out that we couldn’t withdraw cash either.”

While Ms Nazrana had just enough to foot the bill using the limited funds in her emergency Oversea-Chinese Banking Corporation (OCBC) bank account, her date came to a grinding halt as the couple could not access their funds in their DBS bank accounts.

“The recent service disruption has definitely changed my opinion on the reliability of e-payments, especially DBS because this is not the first time I’ve encountered such a disruption from the company,” she added. 

Also caught off guard was 42-year-old Nadya Salyriana Sallehin, a travel consultant, who did not have cash on-hand to pay for her family’s dinner at Tampines. 

Since the family’s initial plan to go on a day trip to Johor Bahru was cancelled due to the Saturday jam, Ms Nadya had only Malaysian ringgit with her, along with her usual contactless mode of payments. 

With the payment terminal at the restaurant she was dining at being affected by the disruption, and unable to withdraw cash from an ATM, Ms Nadya jokingly asked its staff:  “Do you accept Malaysian ringgit?”

Both Ms Nazrana and Ms Nadya posted TikTok videos on Oct 14 about their experience of the banking outage, which have since garnered over 44,000 and 220,000 views respectively. 

Like many of the comments on their videos made by equally affected Singaporeans, the two women found this month’s banking services disruption to be an important lesson in always having alternative modes of payment such as cash. 

“I only started going out cashless this year, but when this happened, it was a wake-up call,” said Ms Nadya. 

“The inconvenience is not just on us, but … on the vendors as well. For a vendor to trust that you’re going to come back and pay is also another question mark — but sometimes you need a painful lesson to realise that it’s not good to not have cash all the way.” 

The disruption saw banking services by DBS Bank and Citibank being down from the afternoon of Oct 14 — a Saturday — due to an issue at the data centre used by both banks.

The outage caused issues with the usage of ATMs, Citi credit cards, PayNow and investments made via the Citi Mobile App or Citibank Online, said Citi Singapore. 

After over 12 hours of the disruption, which DBS first confirmed in a Facebook post at 4.37pm, DBS Bank announced that services had been fully restored overnight. Citibank’s services were also restored overnight. 

The outage follows two DBS online banking and payment services disruptions earlier this year, after which the Monetary Authority of Singapore (MAS) imposed an additional capital requirement on DBS.  

Likewise, Ms Nadya, who was unable to withdraw cash or use her credit cards, had no choice but to promise the restaurant that she would return to settle her dining bill once banking services were restored. She even showed the staff the TikTok clip she had filmed of ATMs bearing the message “this terminal is temporarily offline”. 

“Fortunately, a lot of the vendors were empathetic towards customers, so they accepted the ‘I owe you’ until I paid them the following day,” she said.  

Many other businesses also had to embrace the trust-based system on the spot.

Ms Sidney Lim, co-founder of NearesTTen Curated Thrift Store, chose to let 13 affected customers walk out with their items without paying, anticipating that they would be able to transfer the owed payment once digital banking services were restored.

“We requested them to leave us a direct message on Instagram, including a photo of their items and the total price. Our part-timer also recorded down all the Instagram handles (of those) who owed us the payment as it would be easier for us to keep track and tally the sales,” she said.

The total amount owed came up to around S$510, which Ms Lim was able to recover over a period of two days after bank services were restored.

PREFERENCE FOR CASHLESS PAYMENT: BUSINESSES 

While some businesses resorted to manual tracking during the banking services disruption, others said they were mostly able to continue with business as usual, with customers paying via alternative payment modes.

Mr Colin Chen, founder of cafe Hello Arigato, which has four outlets across Singapore that accept only cashless modes of payments, said that its business was largely unaffected as customers used cards from other banks or opted to pay via GrabPay, an e-wallet.

As the cafe uses an international payment services provider and not terminals from the affected local banks, its payment terminals remained functional.

“Once customers realised the payments weren’t working they swapped to another card that worked, so we’re lucky that there were other banks or credit card providers that weren’t affected.” 

Experts similarly told TODAY that for some businesses, the benefits of accepting only digital payments — such as streamlining operations and reducing the risks associated with handling cash — eclipse the potential drawbacks and impact of service disruptions. 

“The convenience and speed of digital transactions also enhance customer experience,” said Dr Lee from NUS Business School.

Agreeing, Dr Gordon R Clarke, managing director of payment services consulting company Monetics, said that record keeping automatically provided with digital transactions can help business save time both on issuing change and on cash reconciliation.

LESSONS FOR BANKS, BUSINESSES AND CONSUMERS 

While digital bank disruptions are not new, Fair Tech Institute’s Ms Lim said that the Oct 14 outage was “unusual” as it impacted both the online and method-to-offline payments for some banks.  

“PayNow and credit card payments were offline, but what was disruptive was that ATMs — the route-to-cash — were also offline.”

Ms Lim said that the latest disruption demonstrated a “vulnerability that Singapore and our banks need to review and address”. 

To prevent this from happening again, “a rethink and redesign of the internal banking information system architecture” may be needed.

“How robust were the failover systems and what worked or did not work in this particular outage?” was one question to consider, said Ms Lim.

Some experts also highlighted vulnerabilities such as systemic risks from centralised data centres. 

“The fact that banks might opt for the same top-tier data centre or other IT service provider amplifies the likelihood of a systemic outage, which leads to more severe consequences for both businesses and consumers,” said Associate Professor Cindy Deng Xin from the banking and finance department at Nanyang Business School. 

“It is worth noting that when we’re dealing with large transactions, a bank’s IT system and data processing can get pretty complicated….these technological hiccups are not always easy to prevent,” she said. 

Any issue with a data centre key component, including servers and hardware, cooling, and power supplies, could lead to the outage for their customers.

However, Assoc Prof Deng added that while this month’s disruption was tied to a technical issue at the data centre Equinix, this can be a valuable “learning experience” for banks. 

The MAS said on Oct 19 that both DBS Bank and Citibank were unable to fully recover their systems within the required timeframe. Under MAS’ requirements, the unscheduled downtime for a critical system affecting a bank’s operations or service to customers must not exceed four hours within any 12-month period.

While MAS does not have oversight of data centres, it “expects banks to establish contractual agreements with data centre providers that incorporate MAS’ requirements on system availability”. 

At Woofie, an unmanned thrift store, sales on Oct 14 were lower by an estimated 10 per cent as compared to their usual sales for a Saturday, said co-founder Desiree Chang. 

The shop currently accepts two main modes of payments, PayNow or Paylah, and exact cash payments as all items are priced at S$10. 

Ms Chang added that this was the first time it had been affected by a banking services outage, and the store now plans to explore adding alternative methods of payment such as GrabPay and ShopBack.

Consumers, too, should not be totally reliant on just a single mode of payment. They should instead have some cash on them always, and expand their repertoire of digital payment options, the experts said.

“I know people who just go around with their mobile phone with them — though it looks cool, it’s not so practical. Even just some spare cash for small vendors or in the case of breakdowns could serve as a form of insurance,” said Prof Loh.  

Dr Clarke of Monetics also suggested that consumers can consider keeping enough funds in their mobile payment apps, such as in a GrabPay wallet, as a contingency. 

Mr Dayan Koven, Accenture’s managing director of financial services in Singapore, added that it is important for consumers to “approach payments with intention”. This means staying informed about the pros and cons of going cashless, including cybersecurity concerns and guarding against scams. 

“While cashless payments offer convenience and a seamless experience, they also make individuals reliant on technology and internet access, which may lead to additional costs. Consumers should also acquaint themselves with different cashless payment methods to choose the one that suits them best.”

DEFINING RESILIENCE IN ‘LESS-CASH’ SINGAPORE

While cash was still widely used a few years ago, Mr Koven said that the transition towards a cashless society was accelerated by the Covid-19 pandemic, which necessitated contactless methods, online-only retail and saw a rapid adoption of technology. 

The Accenture Payments Survey 2022 found that 76 per cent of respondents in the Asia-Pacific used digital wallets for payment transactions at least five times a month, compared to the 63 per cent opting for cash. 

Singapore’s journey towards an increasingly cashless society has been bolstered by initiatives such as the Heartlands Go Digital programme, introduced by Enterprise Singapore in 2020, to spur the adoption of e-payments and digital commerce solutions among heartland businesses. 

The popularity of e-payments with merchants also comes from the functionalities it provides to businesses, including providing transaction data for analytics. 

Ms Megan Lim, who owns the cafe Overrice, said that the e-payment terminal she uses, Oddle, provides her with “first-party customer data”, including customer lifetime spend, visit frequency, and the most recent visit.

“This allows us to offer personalised and exceptional customer service, such as recognising and rewarding a regular customer a free dish as the e-payment terminal displays the customer has been to the cafe for over 10 times,” said Ms Lim. 

Many businesses also told TODAY that contactless payment is the preferred mode of payment for their target market.

For shops like Solace Studios, an unmanned self-photo studio in Haji Lane, founder Keith Kok said that around 70 per cent of sales are made from cashless options such as credit and debit card payments and digital wallets like Apple Pay, though their photo-taking machines also accept cash.   

He attributed the high uptake of e-payments to its customers’ demographic, which is a younger, “more tech-savvy” crowd comprising Gen Zs and millenials.

This was echoed by Mr Koven, who said that one key reason businesses prefer to remain cashless is shifting consumer expectations, which now tend towards “frictionless payment experiences” and “smooth and secure transactions”.  

Ms Koh from O Happi Place said some customers also prefer to make e-payments because of the various “built in-promotions and loyalty programmes” that incentivise them to make digital payments. 

She cited examples such as earning GrabRewards points when paying via GrabPay, earning a 5 per cent rebate on a subsequent visit for ShopBack payments or even earning miles and discounts when paying via KrisPay.