Mizuho Bank chided for ‘elementary mistake’

The Yomiuri Shimbun
An ATM screen indicates a halted transaction in Kita Ward, Osaka, on Feb. 28.

Lack of management foresight added to confusion after a system failure hit Mizuho Bank Ltd.’s ATMs on Feb. 28.

The bank will outline a new set of preventive measures to the Financial Services Agency as early as the end of this month. The focus will be on how thoroughly the bank can describe its drastic reform efforts to prevent similar incidents in the report.

Lack of common sense

“I can’t believe this kind of mistake on such an elementary thing,” said an executive at a regional bank, who looked appalled at Mizuho’s blunder.

Banks usually get busier toward the end of each month with activities such as the automatic renewal of fixed deposits, a burden that puts stress on their systems. Therefore, holding off on maintenance work on those days is common sense in the bank industry.

Mizuho, however, has been different. In January, it launched a digital account service that does not use paper passbooks. For accounts that had not been updated for more than a year as of the end of January, Mizuho planned to divide them into six batches and convert them to the new digital form one batch at a time.

The system became overloaded on the last weekend of February amid an unprecedented amount of data transferred for the conversions.

Banks must pay a stamp tax of ¥200 per paper passbook for the number of books they have issued as of April.

“We rushed the data transfer, trying to reduce the number of paper passbooks as much as possible by the end of March,” a Mizuho representative confessed.

Mizuho made a complete transition to its current computing system in the summer of 2019. The system as a whole is designed to be protected by isolating the defective parts.

In this instance, most of the bank’s ATMs were rendered useless because irregularities were detected in fixed-deposit transactions.

Although the glitch was corrected a lot faster than the past two major malfunctions, it still caused considerable trouble for many customers.

Further confusion

The most painful blow came when 5,244 customers saw ATMs swallow their cash cards or passbooks — or both — and not immediately return them.

To prevent the use of bogus cards and other forms of fraud, ATMs are programmed not to return them if fraud is suspected.

This function is not widely known, and panicked customers tried to contact call centers using the special phones attached to ATMs. However, because it was happening nationwide, it was impossible for all of the calls to go through.

In fact, according to sources, more than 90% of the calls went unanswered, and many customers were kept waiting in front of ATMs for several hours.

In the event of a system failure, each bank has its own rules regarding ATM card usage. Sumitomo Mitsui Banking Corp. ATMs, for example, are programmed to eject cash cards, but there are instances in which those of MUFG Bank Ltd. may not.

“It is difficult to say which is right,” Toyo University Prof. Hironari Nozaki said. “How to cope with the problem was a rather important step. The bank should have been ready with an adequate number of operators at its call center and an alternative communication system.”

In 2018 and 2019, when Mizuho was making the transition to its current system, it took a cautious approach, suspending ATM operations on nine weekends and having staff members standing by at branches in case of problems. However, the bank did not adopt such measures in the latest case, assuming the data transition would be “not that difficult.”

The system failed at around 9:50 a.m. on Feb. 28. At about noon, Mizuho’s ATM problem started to flood Twitter feeds, but Mizuho executives were unaware of the total scope of the issue.

As a result, it was 2:30 p.m. when management finally dispatched workers to its branches to handle the problem.