#chasefail

By Felix Salmon
September 16, 2010
fiasco is continuing into this morning, at least according to Twitter chatter. The bank's website went down on Monday night, was completely offline until Wednesday, and has been unreliable since then. And the response from the bank has been laughable:

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The Chase online-banking fiasco is continuing into this morning, at least according to Twitter chatter. The bank’s website went down on Monday night, was completely offline until Wednesday, and has been unreliable since then. And the response from the bank has been laughable:

Bank spokesman Joseph Evangelisti said that it did not want to post updates until it had a full understanding of the problem.

Have these people learned nothing from corporate cock-ups from Eurostar to BP? You get out in front of the issue, you apologize and make good to your customers even before you know what went wrong, and, crucially, you communicate frequently on Twitter, which is the first place that people look, these days, for updates relating to rapidly-evolving situations.

Except — get this — Chase isn’t on Twitter. There’s an @chase account, but it belongs to a guy who describes himself as “just some punk kid with a camera”. Similarly, @jpmorgan belongs to Josh Morgan.There’s an @jpmorganchase account, but it’s empty. And at one point there was an @chasebank account, but that has now been suspended, for reasons which are unclear.

The results are predictable enough:

“From this customer’s point of view, management doesn’t seem to care one bit,” said Mike Underhill, a J.P. Morgan Chase customer in West Chester, Ohio…

J.P. Morgan said it expects to issue an apology to consumers, but it had said little on Tuesday about why more than 16 million online customers lost electronic access to their accounts…

“There is a brand and reputational risk here,” said Jacob Jegher, an online banking analyst for financial-services consultancy Celent, citing a flurry of Twitter posts on Wednesday critical of the bank. ‘There is a backlash going on in social circles that is out of control.”

One of the biggest issues that customers have with their banks is that of communication: banks are incredibly bad at telling their customers what’s going on.

What’s more, this whole episode underlines the way in which it’s silly to assume that bigger banks have more robust websites. In fact, the opposite is true, especially in the case of banks like Chase which are the result of many mergers and therefore have to cobble together all manner of disparate legacy systems.

And it also says a lot about redundancy within big corporations, or the lack thereof. The damage from this outage is many orders of magnitude less severe than the damage from the BP oil spill, but both of them are cases where any attempt at back-up plans or redundancy failed. Chase tried to update its website, but didn’t have a backup system in case the update failed; BP tried to put in a blowout preventer, but it didn’t work.

Evangelisti told the NYT’s Eric Dash that the outage “would not have a material effect on the bank’s earnings”, and I daresay he’s right about that. But investors should still care. Chase is one of the biggest consumer banks in the world, and it has proved, this week, that it’s incapable of communicating with those consumers. Insofar as it still has customers inherited from more outgoing banks like WaMu, this episode is likely to accelerate the rate at which they leave for somewhere smaller, simpler, and more reliable. If and when such banks finally arrive.

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