Northern's Wire Operation Aims for 1-Hour Recovery
Looking to give up-to-the-minute assurances to its funds transfer customers, Northern Trust Co. has installed a new system for recovering from disasters.
Officials of Northern Trust say the new technology will enable the bank to accurately assess its financial position, and to recover its operations in less than an hour in the event of a computer or telecommunications failure.
Previously, operations could have been recovered in three to four hours. The Chicago-based bank processes some 6,000 wire transactions - about $12 billion to $14 billion - daily.
"As a money-center bank, we owe it to our customers to have a secure environment," said Stephen Sims, vice president, electronic banking. "We owe it to our existing customer base."
Northern Trust is following in the footsteps of the major New York banks in adopting this recovery technique for wire transfer operations. Last June, the New York Clearing House Association began requiring those members that transfer over $20 billion daily to be able to restore operations within six hours.
Nearly two years ago, Manufacturers Hanover Trust Co. was the first to use remote logging for wire transfers, increasing its disaster recovery budget by $1 million a year.
The technique, called remote logging or remote journaling, makes a copy of each transaction as it occurs and stores the information on a computer at a remote site. If the primary computer fails, the transactions can be fully reconstructed within a few hours.
Northern is the first user of hardware from Tandem Computers Inc. and Money Net wire transfer software from Applied Communications Inc., Omaha, Neb., a Tandem unit, to take advantage of the remote logging process. The transaction-duplication software was developed by Transition Systems Inc., Chicago.
At Northern Trust, the transactions are logged at a duplicate "hot" site equipped with a Tandem computer. Eventually, the bank might add backup for other applications, such as lockbox and automated teller machine operations, at the hot site.
Other Updates Are Slower
With standard disaster-recovery techniques, files are updated every few hours or once a day - but in the event of a disaster, many hours of work must be reconstructed. The recovery process can take nearly a full day.
An outage would have forced Northern Trust to try to reconstruct its wire transfer transactions from tapes that are made and stored periodically throughout the day. Mr. Sims said that the bank could have had to reconstruct more than an hour's worth of transactions.
In tests of the system, Northern Trust has been able to recover its wire transfer operations within 45 minutes.
"The most transactions we can lose if we take a hit is two," said Mr. Sims.
The remote logging software cost Northern Trust under $20,000.