Second Mizuho executive quits after IT problems

The CEO of Japanese finance firm Mizuho has become the second senior executive to quit as a result of IT failures.

Tatsufuni Sakai’s resignation came after Japan’s financial services regulator made an improvement order against the bank and the ministry of finance issued a corrective action order, both in relation to IT problems.

In a statement, the bank said: “We deeply apologise for the inconvenience and concern we have caused to our customers and society by allowing these system failures to occur repeatedly in a short period of time and, as a consequence, failing to adequately fulfil our role in facilitating smooth settlements and failing to adequately ensure thorough operations under the Foreign Exchange and Foreign Trade Act of Japan.”

In March, a glitch, caused by IT hardware problems in a datacentre, affected foreign currency-denominated remittances for corporate customers in Japan, resulting in hundreds of transactions being delayed for hours.

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

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

In June, Mizuho Bank president Koji Fujiwara stepped down from his role after taking the blame for the IT system failures. Fujiwara was joined at the exit door by CIO Satoshi Ishii.

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 risk.

For example, following a botched IT migration at TSB in 2018, millions of customers were unable to access banking services. This cost TSB £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 it 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 the boardroom.

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.