Another prod on payments investment from PSB

Banks are being asked by the Payments System Board to explain their investment plans in "retail operations" as part of a "dialogue" inspired by a series of payments' processing failures over the last year or two.

In a media release yesterday, the PSB said it was "particularly interested" in industry views on banks' "existing plans for upgrade and enhancement of the technology supporting retail operations and the objectives of these plans."

The PSB also said it wanted views on the "sources of vulnerability in ADIs' retail operational processes" as well as "existing controls, safeguards and contingencies in ADIs' retail operations."

This soliciting of views is a prelude to what the PSB described as "developing proposals and launching a formal consultation."

The context to this work is the annoyance of many bank customers, as well as financial regulators, over the frequency of interruptions to payments' processing.

The 2011 annual report of the PSB cited four episodes, the most significant of which was the failure of overnight processing of direct entry payments at National Australia Bank over two nights in November 2010.

More recent episodes the PSB could cite include the failure of payroll processing at Commonwealth Bank on behalf of employees of the Queensland Police Service earlier this month and also for employees of Queensland Health last month.

The PSB said it would "formalise" requirements for the reporting of breakdowns in retail payments, with the criteria for reporting these payments to be advised at a later date.