Can the recurrence of Mizuho Bank system glitches finally be prevented?

The Yomiuri Shimbun

14:58 JST, August 21, 2021

Didn’t they just vow to prevent a recurrence? The fifth system failure this year is nothing short of disgraceful. Management responsibility must be clarified and the entire organization must be overhauled.

Mizuho Bank and Mizuho Trust & Banking under the umbrella of Mizuho Financial Group announced that they were temporarily unable to process in-person transactions such as deposits, withdrawals and remittances at their branch counters nationwide due to a system glitch.

There was a malfunction in the system’s operation equipment, and the backup function did not work. The failure occurred around 9 p.m. on Thursday, and it took more than half a day before the system was fully restored before noon on Friday.

The banks said that ATMs and online banking services were able to process transactions as usual.

In February and March of this year, Mizuho Bank had four system failures, including ones that led to the suspension of ATM services. The repeated problems have only strengthened the distrust of customers.

The latest glitch is a blunder that has betrayed customers. Tatsufumi Sakai, president of Mizuho Financial Group, had stated at a press conference in June that the company would “never cause such a situation again.” As a company that manages financial infrastructure, Mizuho Financial Group bears an extremely heavy responsibility.

The company’s management and governance systems are being questioned, not only their system operations.

A report on the group’s previous system failures, compiled in June by a third-party committee of lawyers and others, pointed out that at the root of the problem was a corporate culture of employees confining themselves to their posts, not acting proactively when problems arise, and avoiding responsibility.

According to the report, the group’s poor response to the crisis was also noticeable. The major outage in February occurred in the morning, but it was after 4 p.m. when Sakai noticed a related report sent to him via email. Koji Fujiwara, president of Mizuho Bank, found out about the glitch in an online news article.

There was no coordination between the respective departments in charge of the system and customer services. The inward-looking nature of the group, which lacks a customer-oriented attitude, needs to be thoroughly revised.

In response to the report, Mizuho Financial Group put together measures to prevent a recurrence, including appointing a director in charge of crisis management and conducting drills. In the latest glitch, the backup system, a lifeline for averting outages, did not work. The inadequacy of the bank’s measures is obvious and should be reviewed.

The group has been subject to a series of scandals and has been repeatedly ordered by the Financial Services Agency to improve its operations since a major system failure in 2002, after the group’s reorganization. Even so, the lack of improvement may have been due to inadequate supervision by the agency.

The agency is considering conducting an inspection at Mizuho Bank and issuing an administrative penalty. This should be the time for a strict inspection so that all the problems can be fixed.

— The original Japanese article appeared in The Yomiuri Shimbun on Aug. 21, 2021.