Dive Brief:
- BB&T is suing computer hardware vendor Hitachi Vantara, claiming the company was responsible for a "catastrophic" outage that kept millions of customers from accessing the bank’s online, mobile, ATM and wire transfer services for 15 hours over several days in February 2018.
- The outage cost the bank "about $15 million in lower deposit service charges and about $5 million in higher operating expenses," Daryl Bible, BB&T’s CFO, told analysts during an April 2018 conference call, according to the Winston-Salem Journal. BB&T has spent $300 million to build redundant data systems to prevent a similar outage, CEO Kelly King said, according to American Banker.
- BB&T is seeking $75,000 in damages in the suit, filed last week in the U.S. District Court for the Middle District of North Carolina. But a jury could increase that award because the bank is asking for punitive damages and compensatory damages with interest.
Dive Insight:
Service disruptions can chip away at customers' trust in a financial institution. Capital One suffered two outages within a week this fall — the latter of which came at a confluence of inconvenient times: a Friday, which is payday for many people — and the first day of the month, when many pay their bills. Customers took to social media to voice their frustrations. The bank’s reputation was already reeling from a data breach that was unveiled in July.
Digital bank Chime also experienced an outage over two days in October because of a glitch at payment processor Galileo, which powers the platform. The glitch also caused minor processing delays for fellow challenger bank Varo, which also uses Galileo. Chime CEO Chris Britt, speaking at Money20/20 in Las Vegas later that month, called the outage "an amazing learning experience." But Varo CEO Colin Walsh, on the same panel, implied his fintech had one of its best weeks at Chime’s expense.
For BB&T, reputation and service are particularly important now, as SunTrust customers are added to the new combined entity, Truist. The BB&T/SunTrust merger is expected to be complete this week.
King, when he addressed BB&T’s outage last year, likened the experience to buying a new car. "You buy any new car, you got to go through about three months [of] working all around wrinkles," he said, according to American Banker. "It’s fine when you go through the wrinkles, but it's a hassle going through the wrinkles."
BB&T is accusing Hitachi Vantara of breach of contract, unfair and deceptive trade practices and gross professional negligence in its management of hardware at BB&T's Zebulon, North Carolina data center. "We believe the vendor who manufactured, installed, and maintained the component was responsible for the equipment failure," BB&T spokesman David White said, according to American Banker.
Hitachi Vantara said it is "in the process of reviewing the allegations made by BB&T."
"Hitachi Vantara believes it provided high-quality service to BB&T at all times, including service delivery and advice regarding best practices for maintaining high system availability," the company said, according to the Winston-Salem Journal. "Hitachi Vantara is trusted by 85% of Fortune Global 100 companies and we take the satisfaction of our customers very seriously."
The outage began at about 4 p.m. Feb. 22, 2018, but some services were not restored until Feb. 26, which elicited angry customer responses on Twitter.
BB&T extended branch hours Feb. 23, 24 and 26, and added employees in its customer care centers, branches and social media response teams. The bank also posted a 97-second video on its website in which King apologized for the outage and explained what happened and what steps the bank planned to take.
An outage map showed the most affected areas were in Raleigh and Charlotte, North Carolina; Atlanta; Washington, D.C.; and Philadelphia.
BB&T hired Hitachi in August 2014 to provide storage disk array equipment and services for its mainframe computer systems. The bank said its employees are not allowed to perform maintenance on the storage disk array or components, according to the Winston-Salem Journal.
