Significant System Malfunction Disrupts Japan’s Major Banking Network

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Significant System Malfunction Disrupts Japan’s Major Banking Network
Credit: © Reuters.

On Tuesday, Japan's primary payments clearing network, the Zengin system, experienced a significant malfunction that affected 11 prominent banks, including JPMorgan Chase (NYSE: JPM ) Bank, MUFG Bank, Mitsubishi Trust, Resona Bank, Saitama Resona Bank, Kansai Mirai Bank, and Yamaguchi Bank. The disruption caused a ripple effect on fund transfers and left more than a million customers unable to execute electronic transfers to other banks.

The Japanese Banks' Payment Clearing Network, the operator of the Zengin system, remains uncertain about the root cause or the resolution timeline for this unprecedented glitch. This incident marks the first failure of the Zengin system since its inception in 1973. The system handles an average of 6.5 million transactions and over 12 trillion yen ($81 billion) daily.

Among the affected banks, MUFG Bank could not carry out or accept transfers via ATMs and online banking due to the issue. Similarly, Resona Bank anticipated potential incomplete transactions for the day. Mizuho Bank and Sumitomo Mitsui (NYSE: SMFG ) Banking Corp also experienced delays in interbank transactions.

Despite the setback, transactions already accepted were processed through a backup system and were expected to reach their destination accounts by the end of Tuesday. This incident follows a series of similar disruptions that have occurred globally in recent years. For instance, the systems meltdown at the Bank of Ireland and two global Internet outages in June 2021 affected various entities such as Virgin Australia, Commonwealth Bank, Delta Airlines (NYSE: DAL ), the Hong Kong Stock Exchange, and digital platforms like HBO Max.

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