Japanese bank boss to leave after IT failures

Koji Fujiwara, president of Japan’s Mizuho Bank, is stepping down from his role after taking the blame for IT system failures earlier this year.

Fujiwara is joined at the exit door by the bank’s CIO, Satoshi Ishii, and the organisation’s CEO is expected to take a pay cut.

This follows widespread IT system failures at the bank, according to reports. In March, a glitch, caused by IT hardware problems in a datacentre, affected foreign currency-denominated remittances for corporate customers in Japan and hundreds of transactions were delayed for hours.

An earlier problem affected more than 4,000 ATMs nationwide, with thousands of bank cards stuck inside the machines.

These followed a heavy investment of $3.6bn spent by Mizuho to overhaul its IT systems in 2019.

According to Nikkei Asia, dozens of staff, including executives, will also be held responsible for the system failures.

An investigation into the IT failures, commissioned by the bank, said Mizuho rotated tech staff too often, so knowledge was not retained, and managers were not positive and proactive.

“The atmosphere within the company is one where managers believe the best course is to take the stance that they have done what they are supposed do, rather than taking the risk of actively expressing their opinion,” said the report. “This contributes to a lack of positive and proactive action on their part.”

The growing importance of IT in banking means non-tech executives will increasingly be held responsible for IT failures. A major IT failure can have huge detrimental effects on customers, and put financial services companies at financial risk.

For example, following a botched IT migration at TSB in 2018, millions of customers were unable to bank. This cost TSB a total of £330m, which included compensating customers, buying additional resources, fraud and lost income.

TSB CEO Paul Pester was forced out of the bank in the wake of the IT disaster, which occurred after the bank migrated accounts to a new core banking system. 

The problems started in April 2018 when TSB moved millions of customer accounts from the Lloyds Banking Group IT system that hosted them to a new banking platform, known as Proteo4UK, from TSB’s Spanish parent, Sabadell.

Many in the industry argue that such is banks’ heavy reliance on IT that they should have tech experts in their boardrooms.

In its annual report last year, the European Central Bank said it would look more closely at the IT expertise of board members at banks.

The report followed self-assessments by banks which found that those with a higher number of board members with IT expertise displayed positive characteristics. “These institutions report higher expenditures in terms of IT innovation and closer monitoring of IT risks,” it said.