During Black Friday 2017, Standard Bank’s transaction volumes on its credit and debit cards spiked more than 100% compared to the same event the previous year. In 2016, Absa said its total customer issuing spend for the Black Friday weekend was just over R1bn.
Payment glitches that cause shopping chaos during peak periods like Black Friday have become an all too common experience for South African consumers.
South Africans have bitten the Black Friday bug that happens every year in late November, and which is typically followed by ‘Cyber Monday’. The craze has only become bigger with every year.
It’s unsurprising then that with high transaction volumes comes higher risk. On Black Friday 2017, Nedbank experienced downtime that temporarily knocked out trading for a few hours.
And during Black Friday 2016, local retailers and banks started blaming each other when a series of transaction blackouts left consumers fuming in queues.
Bloated legacy systems
Outages such as these primarily boil down to ageing and complex legacy systems at banks, according to Trevor Belstead, Delta Capita’s London-based Head of Transactional Banking Solutions. Delta Capita is a top international business & technology consulting and managed services firm with offices in cities such as Johannesburg, London and Hong Kong.
“The systems that we operate today in the financial services industry – specifically in banks – were built a long time ago for a retail shopping experience that did not require the sheer volume of transactions we see during periods like the Black Friday weekend,” says Belstead.
“Many banks have tried to mitigate the problem with small changes to systems or bolt-ons, and have ended up with a very complicated infrastructure. The problem with this is that we don’t entirely understand where the weak points are,” he says.
When it comes to these weak points, Delta Capita’s Managing Director for South Africa, Earl McCausland, says these have a significant operational impact.
“Banks use enormous amounts of time and human resources in investigating and managing incidents. The management of incidents, client fallout and reputational issues, in particular, require significant management time and effort. Once they finally identify the root cause of the failure, more time is then required to bring the system back online – resulting in frustrated consumers and loss of revenue for the banks and retailers,” says McCausland.
Ideally, one solution to this problem is for banks to completely overhaul their complex legacy payments systems and rebuild them from scratch, says Belstead.
The world’s biggest online retailer, Amazon, has already shown the way in this regard. Five years ago, Amazon was struggling with regular failures, but they went through a massive transformation to the point now where it’s one of the most stable transaction platforms in the world.
However, this solution is a complicated, costly and time-consuming process.
So, whether banks rebuild their systems or use other means, they should ultimately consider utilising transaction monitoring technology, which allows them to instantly locate missing payments and proactively avoid payment outages. Whilst South African firms are yet to adopt such technology, it is used extensively by banks and exchanges in the UK, US and Australia.
This technology provides banks with end-to-end operational monitoring of their complex payments architecture in a single view. This single view further allows banks to identify system and payment performance issues as they occur and provides insights that technology, management and client-facing teams can then use to manage the situation before it escalates to a critical stage. And if incidents do occur, it gives banks insight into the impacted clients and payments so as to instantly and significantly improve the accuracy of the initial assessment, reducing incident investigation and resolution times.
When it comes to these types of solutions, Delta Capita partners with Velocimetrics which is a market leader in real-time, business flow performance tracking and analysis technology.
Delta Capita is able to provide this technology which sits atop a bank’s infrastructure in a non-intrusive way, ensuring that performance is not inhibited. Velocimetrics was initially built to monitor exchanges and trading environments by tracking fast-moving, nano-second data such as price tickers and trades.
It’s therefore been designed with the highest volumes and lowest latency models in mind – features that are more than sufficient for banks on days such as Black Friday.
Another key feature of Velocimetrics is that it provides Treasurers with intraday insight into the number and value of settled and unsettled payments, thereby improving the accuracy of daily liquidity provisions and overnight lending.
“Delta Capita is able to provide these solutions via various deployment models, including a managed service, where only the visibility points are installed in the banks’ estates. We operate and run the analytics platform and give our customers access to the data. So, we’ve got a very flexible model,” says Belstead.
Finally, McCausland says banks’ experiences would be radically improved by using such a solution.
“Banks which adopt transaction monitoring and effectively make use of the insights gained will benefit from improvements in STP (straight-through processing), system uptime and availability which, in turn, results in fewer failed transactions. Consumers and retailers will subsequently enjoy a better experience at the tills over Black Friday and the Christmas season. Banks will manage fewer complaints and have improved relationships with retailers and clients.”