In January of this year, the Wall Street Journal ran an interesting article about the potential computer integration problems banks were facing in light of all the mergers and acquisitions that were taking place. One bank highlighted was Toronto-based TD Bank, which had bought Commerce Bank in 2008.
The story noted that "about half of parent TD Bank Financial Group's 1,075 branches on the East Coast have two computer systems that can't talk to each other," and that this autumn, TD Bank would undertake the integration of the two systems.
The WSJ story went on to say that:
"TD began handling transactions by hand from its entire customer base at the combined bank's branches within days of the Commerce deal's completion. About half those locations were merged into one computer system in November."
"TD still uses a second system in those branches to handle customers like Mr. McKitty, who opened his account at a Poughkeepsie, N.Y., branch of TD Banknorth about a decade ago. That is the longtime name of TD's bank unit in the U.S., but it will be phased out this fall."
"Could it have been a nightmare? Absolutely,' says Linda Verba, who runs TD's retail operations in the mid-Atlantic region. 'But it got us closer to doing a big-bang system conversion and working out the bugs before we pulled the switch.' "
Well, if you read all the news reports this week, TD Bank did not work out all the bugs before its big-bang conversion and is now dealing with a nightmare situation after all.
This past Saturday, TD Bank merged the computer systems of two acquisitions: Banknorth in Maine and Commerce Bank in Cherry Hill.
Problems with the conversion became rapidly apparent by Monday morning.
"Typically at any bank, customers deposit or withdraw money, write checks, or transfer funds online, in the bank, in stores, and at ATM machines during the day. All those transactions get reconciled overnight in a process known as "batch posting."
"On weekends batch posting takes place just after midnight on Sunday and into early Monday morning."
"Over the last weekend, after warning customers about the change, TD's computer people merged the two bank's systems. The trouble showed up with the first batch posting in the new system. Instead of finishing early Monday morning, the process took well into the day, leaving customers confused. Each subsequent night's batch posting had problems, and it will not be clear until this morning whether the problem is fixed."
No word at the time of this post whether last night's postings went well or not.
In addition to the posting issue, direct deposits like Social Security checks were not showing up in customer accounts, nor were automatic bank payments (like mortgage and tax payments) being made. Depositors also did not know whether they were overdrawn on their various bank-related accounts.
To say the least, a great number of the bank's 6.5 million customers are not happy, with many complaining that they cannot reach customer service for help.
"Online computer glitches with direct deposit created a near run on the bank."
TD Bank hasn't helped itself much either by repeatedly declaring this week that the computer problem has been fixed, only for it to continue unabated.
The bank has issued a statement on its web site promising that the problems will all be resolved very soon and it has pledged to reverse any "fees, charges or interest incurred" as a result of the computer problems.
That may take awhile, however.
There is also no saying how long it will take TB Bank to regain its customers' trust.
Robert N. Charette is a Contributing Editor to IEEE Spectrum and an acknowledged international authority on information technology and systems risk management. A self-described “risk ecologist,” he is interested in the intersections of business, political, technological, and societal risks. Charette is an award-winning author of multiple books and numerous articles on the subjects of risk management, project and program management, innovation, and entrepreneurship. A Life Senior Member of the IEEE, Charette was a recipient of the IEEE Computer Society’s Golden Core Award in 2008.