Technology is prone to glitches and other errors. That is par for the course but can have severe consequences for financial service providers. For example, CIMB had a processing error costing the firm $67 million, confirming a more thorough investigation may be warranted.
A Rough Day At The CIMB Office
It is always unfortunate when a technology glitch disrupts an otherwise well-working system. For CIMB in Malaysia, the glitch became a processing error allowing some customers receive duplicate credits to their accounts. Normally, that would not be worthy of news, but this incident caused a loss of $67 million for the company. However, overpaid funds will be debited from affected user accounts to make up the difference.
A CIMB representative adds:
“In view of the ongoing assessment and recovery measures, the group has prudently provided for the majority of the exposure with an ECL of RM280.9 million in FY21. Depending on the group’s recovery engagement and outcome with customers, an additional and lower final provision amount may be taken in the first quarter of 2022.”
It is uncanny how a glitch can affect such an institution for a vast sum without anyone noticing. Someone has to see something is wrong before things escalate and the sum of $67 million is reached. In this case, that did not happen, raising many uneasy questions that one cannot answer right away.
Moreover, one must wonder if recouping overpaid funds from CIMB customer accounts is the right move. Some customers may have already spent the money, as it is not their fault the money from third-party remittances was credited twice. Even so, it seems unlikely they can avoid this face, as the bank ultimately has the final say in customer funds matters.