Banks have largely recovered from a Fiserv outage on Friday that resulted in the loss of multiple money movement services, including peer-to-peer payments platform Zelle. But the loss of services reiterates the importance of contingency planning.
"On Friday morning, we experienced an internal issue that temporarily disrupted service. The issue was fully resolved Friday, and all impacted transactions have since been successfully processed," a Fiserv spokesperson told American Banker.
Consumers were unable to send money through Zelle as a result of the outage, according to posts on DownDetector, a website that provides real-time monitoring and reporting of online service outages. ACH was also affected.
The disruption occurred during a planned "enhancement" to the network infrastructure at a Fiserv data center, the spokesperson said. "When the issue arose, our network team acted immediately to reverse the change and implement a series of phased, carefully coordinated actions to restore service. These efforts were carried out in close collaboration with our technology vendor partners. The impact was limited to financial institutions whose systems are connected to the affected data center."
About 60 applications went down, which affected customers' ability to move money externally, according to an executive from a regional bank, who requested anonymity to discuss nonpublic matters.
"Service started coming back up towards the second half of the day, but [it took] more than 12 hours to get the issue resolved on their side," the executive said, noting that Fiserv provided updates every 15 minutes and larger communications every hour.
Spokespersons from Bank of America, Capital One and Navy Federal Credit Union confirmed the issue has been resolved.
Fiserv is a reseller of
Fiserv serves a portion of those financial institutions. FIS and Jack Henry are also resellers of Zelle's platform.
Banks and credit unions have processing agreements that enable multiple payment types to go through different rails through their system, such as card transactions, Zelle transactions,
"When the processor itself goes down, all those connections are lost, not because of the root solution," DeSanctis said. "Visa and Mastercard did not go down. Zelle itself didn't necessarily go down, but the connection that one vendor's client specifically had to those different platforms is what got lost [or] broken."
The outage underscores the importance for banks to have
"Any disruption of this scale is cause for concern. Events like this expose vulnerabilities in our digital payment infrastructure and remind us how a single point of failure at a major provider like Fiserv can ripple across the entire system," Perry said.
"One clear takeaway: Contingency planning is essential. Whether that means building in backup payment rails or implementing better real-time monitoring, institutions need to be prepared because consumers have little tolerance for these situations," he said. "Hopefully, this serves as a wake-up call for banks and industry leaders to double down on resilience and rethink the architecture of modern payments."
But building redundancies around core or payment processing is no easy task for banks, largely due to the cost, DeSanctis said. "You can't afford to have redundant systems. It's not really economically feasible. [Banks] really need to ensure that they maintain their own redundancies and enough uptime availability."
Banks can ensure that there are measures baked into their contracts to protect against widespread outages of critical services, DeSanctis said.
"Make sure you have service level agreements in terms of system stability and uptime, and that there's penalties for the vendor if they can't deliver that," DeSanctis said.
Penny Crosman and Melinda Huspen contributed reporting to this article.
