Last week at his post-half-year results market briefing, NAB chief Cameron Clyne was asked if the bank’s air-conditioners were up to scratch. The market was still digesting the news that a faulty air-conditioning unit managed to send Westpac’s entire ATM, Eftpos and online banking network down for six hours.

After he realised the question was serious, Clyne’s response was to point to the banks’ “extensive business continuity and disaster recovery plans”, and the work the bank has done improving its systems on the back of its own payment systems glitches.

There’s a problem with that argument, however, and it has to do with how the bank manages disaster recovery and processes payments.

NAB, and as was revealed last week, Westpac, are loath to cut over to disaster-recovery mode. Significant downtime would have to be a definite probability before they would even contemplate the switch.

The reason is most Australian banks still run once-a-day settlement with overnight batch processing, and in disaster recovery mode that can get complicated.

Elsewhere, such as the UK, payments are processed in real-time. Australians still face the inconvenience of their funds magically disappearing into the Bulk Electronic Clearing System before being settled to the recipient’s account, a disappearing act that can take days when a weekend is involved.

It’s time the industry lifted its game, says Jost Stollmann, a former politician who, after moving to Australia from Germany, decided to take on the banks with Tyro, the first new Eftpos solution to emerge in 14 years.

Tyro counts Atlassian co-founder Michael Cannon-Brookes among its board members, and the company is something of a marketing machine, but it’s had a tough ride after being forced to fight the banks tooth and nail for access to the payments system.

Stollman says the issue is not about disaster recovery, but disaster avoidance.

“The settlement processes have to move from once a day overnight to multiple intra-day settlements and ultimately real-time,” says Stollman. “This would de-risk the payment system and offer a level playing field for new entrants.”

A level playing field for new entrants? That’s not the kind of language the big four banks have responded well to in the past.

Meanwhile, Clyne boasts of the increased number of compliment letters he received as a result of how the bank handled recent payments glitches that left thousands of customers out of pocket, in some cases for days, compounded by settlement problems within the bank.

Glitches are a product of 40-year-old legacy systems that industry players are all working to replace, says Clyne, refusing to rule out further downtime.

Customers understand that “things happen in big companies”, says Clyne, it’s how you handle it that matters. There’s an understatement.

One of the things that happens is successive CIOs find ways to avoid spending money, leading to decades of under-investment in technology.

Another thing that happens is outsourcing of IT management to cheaper locations, and contracting out of staff with critical skills to technology giants.

Why do these things happen? Because without new entrants forcing change, banks see no imperative to invest for the future.

NAB is now three years in to its Next Gen project, and last week’s results reveal the bank spent $202 million on IT in the half-year. Clyne calls it a journey. The problem is it’s a journey that should have started a lot sooner.

*This article was originally published at Technology Spectator