Payment gateways have long been a vital part of an increasingly connected world , keeping commerce flowing smoothly within the global financial structure. But the Japan Bank Consortium incident highlights the fact that the key technologies that support them are outdated and increasingly incapable of handling the load.
Last week, the Japan Bankers Association said more than 1.4 million domestic bank transfers were disrupted due to a glitch in its payment clearing network. It was the association's first major system failure since its inception in 1973, affecting 11 banks and leaving 400,000 transactions unprocessed by the end of the day. Transactions via ATMs, online banking and over-the-counter banking were all delayed.
Server failure causes payment transactions to stall in Japan
Reuters reported that an investigation by the Japan Bankers Association found that the disruption was caused by a lack of memory in the payment clearing system's servers. The incident demonstrated how the global financial system continues to be over-reliant on legacy systems and technology.
Earlier in 2021, the UK Financial Conduct Authority (FCA) found that around a third of surveyed firms relied heavily on legacy technology infrastructure, with 58% of surveyed firms reporting that they still relied on legacy technology for some functions.
The incident in Japan was completely resolved after two days, before that the operator used backup measures to process transactions and tried to restore the system the next day but also failed.
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