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NEWS


Commonwealth Bank of Australia admits loss of 20 million data records


C


ommonwealth Bank of Australia (CBA) has admitted to misplacing the banking records of as many as 20 million people.


The bank, which is the largest lender in the country by size, charged a subcontractor with destroying the names, addresses, account numbers and statements of customers from 2004 to 2014. The data was stored on two large tape drives, and was subsequently lost by the firm in 2016.


Fuji Xerox, responsible for the destruction, was tasked with the decommissioning of a data centre by the bank. Backup magnetic tape drives of financial statements were believed by CBA to have been sent to be destroyed. Yet, a certificate of destruction wasn’t found by the bank, which launched an investigation in May 2016.


The Commonwealth Bank of Australia can’t guarantee customer data was destroyed


According to Buzzfeed News, which broke the scandal, the bank launched a taskforce charged with recovering the missing tapes, named Project Chesapeake. Despite the snazzy name, it was unable to locate anything. Forensic teams formed the opinion that the tapes had, in all probability, been destroyed. The tapes were not encrypted.


“We concluded, given the results of the investigation, that we would not alert customers,” Angus Sullivan, CBA’s acting group executive for retail banking services told Buzzfeed News. “We advised the OAIC (Office of the Australian Information Commissioner) who subsequently advised us that it did not intend to take any further action in relation to the matter.”


The OAIC confirmed that it had not taken any further action after consulting the evidence given by the bank. The bank, in a filing to the Australian Stock Exchange, stated that the tapes did not contain passwords, PINs or data that could be used to conduct account fraud.


It’s not been plain sailing for the Australian lender in recent times, as in December 2016 it was hit by civil penalty proceedings from the Australian Transaction Reports and Analysis Centre (Austrac). CBA had been accused of “serious and systematic non-compliance” with anti-money laundering and counter terrorism regulations.


CBA had reportedly breached the regulations on 53,700 occasions. The bank admitted in December 2017 that incongruent datasets had caused the issues. The bank faces a maximum penalty of AU$18


million ($14 million) for each contravention, but settled for a penalty of AU$375 million ($295 million).


Despite these issues, the bank has enjoyed multiple years of steady growth, mostly buoyed by its stranglehold on the Australian mortgage market. CBA sells about one quarter of all home loans in its home country.


In 2015, CBA announced record net profits of AU$9.1 billion for 2015, with a 5% increase in cash profits from 2014. The bank’s technology projects were highlighted by its group CEO, Ian Narev, who pointed to its “high levels of investment” in that sector throughout the financial year.


A little over 21% of total sales in CBA’s retail banking operations are made through digital channels, while growth in digital usages from customers in their 50s has seen a 30% rise year-on-year.


The bank reported its eighth consecutive rise in annual profit last year, with a 7.6% rise in net profit to AU$9.93 billion. Cash earnings experienced an increase of 4.6%, to AU$9.88 billion.


CBA currently runs SAP for Banking at the core, after a system implementation fraught with difficulties was completed in 2013. The go-live was two years behind schedule and had, at times, been costing the bank AU$1 billion per year. The bank posted an IT spend of about AU$752 million for the first half of 2018.


www.ibsintelligence.com | © IBS Intelligence 2018


Beau Giles/Flickr


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