JPMorgan Chase experienced an outage on Tuesday, which disrupted all Zelle transactions and prompted users to take to social media to air their complaints. Not longer after, Zelle sent a tweet indicating that all systems were normal on their end and said that Chase was having “an issue with payment processing.”
Although Chase—one of the seven co-owners of Early Warning, Zelle’s parent company—took ownership of the issue, it declined to reveal what caused the glitch and instead announced that the issue had been resolved by midday Wednesday.
Modernizing Bank’s Legacy Systems is a Must
Many banks are still using outdated and inadequate legacy systems that are incompatible with emerging technology and customer demands. Unfortunately, this truth is what has played out in full view: real-time payment networks created for app-based payment systems have clashed with banking systems originally designed to process paper checks. This disconnect has far-reaching implications and consequences.
“These kinds of issues are going to come up. And [they] won’t be fixed until the industry goes to a true real-time processing scheme for their core systems, which is not likely to come any day soon,” Richard Crone, CEO of Crone Consulting LLC told American Banker. “The unexplained outage at Chase and its implications for Zelle point to the challenges of integrating real-time payment systems like FedNow with legacy batch-based bank systems designed over 70 years ago, which have to be adapted to accommodate non-repudiation and real-time processing requirements.”
Modernizing legacy systems are a significant sticking point for many banks. Not upgrading these systems stands in the way of enhancing the customer service experience and boosting their profit margins.
“It’s absolutely critical that banks and service providers sync their legacy and newer, digital, real-time payment systems,” said Elisa Tavilla, Director of Debit Payments at Javelin Strategy & Research. “Customers expect a frictionless, fully-functional user experience, and when that falls short, even one time, you risk losing them forever.”