Case Study: BPI reports ‘internal data processing error’

In partial fulfillment of the requirement in

Human Resource Management (BAHR 211)

Code: 01741

Submitted by:

Arjie Bangkil

Jillian Bermoy

Resel Napatotan

Jireh Faith Cuevas

Danila Catarinen, Jr.

Submitted to:

Prof. Joanna Lynn Mercado

 Case Analysis Rubrics

Content 5 4 3 2 1
Background of the Case
Cited the important events
Summary of problems
Issues and Concerns
Problems encountered in the
case
Point of View
Appropriate person who can
solve the problem
Statement of the Problem
Must be related to issues and
concerns
Objectives
Areas of Consideration
Facts found in the case that can
influence the solution
Alternative Courses of Action
Possible solution for the
statement of the problem
2 or more with advantages and
disadvantages
Recommendation
Just cite 1 from ACA
Action Plan (Plan of action)
Total
 Table of Contents

Background of the Case --------------------------------------------------------------------------- 1

Issues and Concerns ------------------------------------------------------------------------------- 2

Point of View ------------------------------------------------------------------------------------------ 2

Statement of the Problem ------------------------------------------------------------------------- 3

Objectives --------------------------------------------------------------------------------------------- 3

Areas of Consideration ---------------------------------------------------------------------------- 4

Alternative Courses of Action -------------------------------------------------------------------- 4

Recommendation ----------------------------------------------------------------------------------- 5

Action Plan ------------------------------------------------------------------------------------------- 5

Background of the Case

The BPI founded in 1851 and operates for almost 163 years ago, the company
has acknowledged as a leading provider of financial services in the Philippines. Among
the services that they offer to the customers includes insurance, banking, lending,
asset management, leasing, brokerage and distribution, foreign exchange, and
corporate and investment banking. The wide range of financial service to their
customers made its operation and establish over 800 branches, 3000 ATMs both in
the country and international.

Originally known as El Banco Español Filipino de Isabel II, its mission is

“anchoring our institution in our four-fold commitment to clients, people, shareholders,
and country, we aim to take advantage of the country’s good macroeconomic
fundamentals by carefully and systematically overlaying scale over some of the best
financial metrics in the Philippine banking industry. The bank brings on the tradition by
financing public and private support of nation buckling and growth.

Ayala-led Bank of the Philippine Islands reported on Wednesday an “internal

data processing error” that had led to discrepancies in bank account balances
complained by some clients. On June 7, 2017, the Bank of the Philippine Islands (BPI)
suspended its online transaction and automatic teller machine services amidst reports
of money missing from its account holders. There was speculation that BPI was
compromised by hackers but the bank claimed that the problem was caused by an
internal data processing error. The scope of the issue was nationwide according to the
bank and also said that only a small portion of its customers were affected and that
most of them were in Metro Manila. It is a female “specialist” of the Bank of the
Philippine Islands (BPI), who held up to the computer glitch that the bank reported and
she had been moved to another area. According to the report that this programmer
topped her programming class and one of two who had access to the system. This
particular person also owned up to committing the mistake. It was reported that the
value of some transactions made from April 27 to May 3, 2017 were doubled. The bank
issued a statement that they were resolving the issue and assured that its clients would
not lose any money.

BPI's stocks in the Philippine Stock Exchange remained unaffected in

response to the incident. Luis Limlingan, head of research and sales at Regina Capital
Development Corporation viewed that most investors could have seen the incident as
a one-off event that could be resolved. According to Limlingan the real problem was
how BPI dealt with its disgruntled customers. BPI announced that they resolved the
issue at 9 p.m. on June 8, 2017. The Bangko Sentral ng Pilipinas, the country's central
bank, launched a probe on the incident. BPI also apologized for the inconvenience
caused by the error, vowed full resolution within the day and assured that no client
would lose money over this incident.

Issues and Concerns

 Unauthorized transactions in the accounts of Bank of the Philippine Islands

(BPI) clients.
 Causes disparity in bank account balances.
 Some clients may have seen their accounts debited twice or credited twice for
a past transaction.
 The internal system error that caused some transactions.
 Some BPI accounts are getting negative balances as up to five digit negatives
 BPI clients are disappointed and have been posting screenshots and pictures
of transaction receipts and the bank’s online banking portal since the disruption
 Take down electronic channels, basically these are services related to the ATM
cards, internet banking, and mobile banking.

Point of View

The appropriate person who can solve the problem is the manager because
one of a manager’s most important tasks is to solve problems.

 They find answers to difficult questions that are sometimes a source of great
confusion and distress for the organization often falls to the organization’s
leaders.
 A company’s success are determined by the managerial problem-solvers
because issues arrive in all sizes, ranging from daily nuisances to
organizational crises.
 Managers have the ability to thoroughly think over the facts, analyze the
situation, and find a correct and feasible solution will help the business succeed
and prosper.
 They are effective problem-solvers and are competent to guide teams towards
the achievement of goals by eradicating frustration, confusion, and errors
before they become uncontrollable.
  They also build cooperation and teamwork between individuals, eliminate the
need for rework, and nurture continuous improvement.
 The best managers often sense problems with keen insight. They may notice
an abnormality from standard team performance, such as a missed deadline
or an unmet sales goal—and when the team’s plans go off the rails, these
managers automatically begin the problem-solving process.

Statement of the Problem

The general problem of the study is: How may “Bank of the Philippine Islands
Malfunction that Caused Inaccurately of Million Pesos by Depositor” be examined and
analyzed the causes of the problem to discourse the best possible solution in the
Philippine banking system.

Specifically, the study sought to answer the following questions below:

1. What are the common system practices in the Philippine banking system that
lacks security?
2. What changes could be developed to avoid possible future in the Philippine
banking system?
3. What is the acceptable level of development to sustain a high level of security
in the Philippine banking system?

Objectives

 The general objectives of the study is to describe and gain insights of the
problem that the Bank of the Philippine Islands has encountered.
 This study focuses in what are the factors that causes such error to occur in a
banking institution.
 Delivers the solution to avoid the most common errors to occur in the banking
system.
 Determine whether the innovation is feasible and beneficial to the society.
 Implement innovation that requires professional ethics and advancement to
avoid future glitch and errors.
 The study aims to provide a thorough analysis on errors that led to banking
malfunction.
  The study will distinguish continuous success that will give the company an
assurance to customers by using the right organization management.

Areas of Consideration

It was a female specialist who owned the computer glitch that has been
reported last June 7, she was moved to another area. It is true that there is no perfect
technology, everything needs to be maintained so that it will operate, and reliability is
a common issue in dealing new technology that will be efficient and effective in its
operation. The most common system practices in the Philippines were:

 Not keen on aftersales support upon the purchase of technology

 Adapting technology with lower quality and cost
 Lacked of trained professional to support the operations every time of
operations
 Lacked of backup system that automatically replace upon occurrence of errors

Alternative Courses of Action

Continuous success of innovating and changes could be developed and

adapt to avoid possible glitches in banking systems. Banking system uses electronics
and programs that serve clients. Innovation requires updates and control of update or
the other way is required re-engineering process that takes time to implement but a
thorough study implicates. In this way, the possible future glitch could be avoided and
growth could achieve. The level of improvement sustains a high level of security in the
Philippine banking system. It requires equipment’s and advance devices, improvement
involve costing but it deals for long-term of convenient operation in a way the services
that the company offers to satisfy majority of the clients and they will trust and remain
loyal to the institution. The gauge of measure how satisfied are your customers to the
services will show long-term engagement and success to the institution.

The institution must also conduct a well-designed training program that

communicates to the employees to know them more because a training program will
strengthen and improve the skills of the employees. A development program brings all
employees to a higher level so they all have similar skills and knowledge.
 Advantages

 Innovation of technology will help the company evade future problems

 It involves long lasting and accessible operation
 Training employees will help the institutions development and success
 Training will prepare the employees how to share information and making
decisions that will benefit the institution

Disadvantages

 Reorganizing the system will waste a lot of time

 It will cost a large number of money
 Untrained employees will end up causing more errors
 Employees that lacks training are the one who make frequent mistakes

Recommendation

Based from the results of the study, the following recommendation were drawn:

1. Provide a thorough technical training for professionals.

2. Study the pros and cons of innovation and appropriate techniques.
3. Assures quality devices/technologies in achieving growth.
4. Provide maintenance and service to those devices.
5. Conduct training for employees in order meet the needs of the organization.

Action Plan

Security serves everyone a comfort or feeling of being secured, because of

these the clients trusts the institutions services because it deals with different
transactions that mostly involves cost. Even the way people save their incomes and
money, depositing it to the bank is the common way for a person to keep a money.
Although, today’s technology offers a wide variety of services that are convenient for
every transaction an individual will make.

To avoid future errors such as glitch, we need to determine how to innovate our
technology that will be beneficial to our society. These technologies are most likely in
a sense that it is being used to what it intended to work. We need to define problem
because well-defined problems will lead to developed solutions. When developing new
services they always attempt to solve and articulate those issues are important.
Measure the opportunities for improvement because we need to manage the result of
the internal processing data error. Analyze the existing situation, understand what
problems that are preventing the organization from progressing, and generate a range
of possible improvement opportunities. Continuous improvement of employees by
giving them training opportunities will increase the productivity, improve the quality of
work, and will minimize casualties like glitch. Organizational control helps to identify
errors and deviation from standards so that corrective actions can be taken to achieve
goals. It will also ensure that the specific function of an employee is performed
according to established standards. Designing process helps improve the human
experience, it focuses on addressing employee’s needs and want with what the
institution can offer and deriving the value of the banking institution’s strategy to its
market opportunity. Through training and development employees will have the
opportunity to learn concepts and provide vital business decisions that substance to
the company as a whole. In this way, the possible future glitch could be avoided and
growth for the banking institutions will be achieved.