Restrictions on withdrawals, ATM hardware errors, widespread fraud – while these may sound like the kind of problems associated with a burgeoning economic platform, they are in fact issues dominating the headlines of traditional global finance.
In the past week, UK customers have encountered complications withdrawing cash from major banks (including Bank of Scotland, Halifax, HSBC, Lloyds and TSB) due to contentious policy changes and service interruptions.
On 24th January, it was revealed that HSBC had failed to inform customers of a policy change implemented in November that would require consumers to submit “evidence” to complete cash withdrawals of £5,000 to £10,000.
The revelation caused widespread public outrage among privacy and alternative currency advocates who view the development as symptomatic of the increased control banks and financial institutions are exerting over the traditional monetary supply.
.@hsbc_uk_press In light of recent revelations of accounting scandals and Hezbollah money laundering, why should anyone believe you?
— Max Keiser (@maxkeiser) January 25, 2014
Similarly, Bank of Scotland, Halifax, Lloyds and TSB customers were affected by the unscheduled shutdown of cash machines and debit cards on 27th January, which representatives claimed was caused by a server failure.
Up to 3,500 ATMs were not working for three hours, reports said.
Cash withdrawal restrictions
HSBC’s actions were not just concerning to consumers. In the aftermath, major banks also moved to distance their brands from such restrictions, clarifying their policies on large cash withdrawals.
None indicated that they would require evidence to authorize this action, though all stated that they still reserve the right to ask questions about large withdrawals as a consumer protection precaution.
Yet, while the consumer protection angle was a favoured explanation by banks, certain consumers saw it very differently. Stephen Cotton, the HSBC customer whose story incited the maelstorm, got to the heart of the issue in press statements made after he was denied both £5,000 and £4,000 withdrawals. Cotton said:
“You shouldn’t have to explain to your bank why you want that money. It’s not theirs, it’s yours.”
Cotton has been banking with HSBC for 28 years, and had previously received indications from phone support that he could make such a withdrawal. Following the backlash, the bank quickly moved to change its guidance to employees, instructing them to make clear that providing such information is not mandatory.
Speaking on the policy, HSBC said:
“Cash presents more risk, and in particular financial crime risk, than other payment methods. It also leaves customers with very little protection if things go wrong.”
“Therefore, we need to monitor particularly closely movements of cash in and out of the banking system. This is why we ask our customers about the purpose of large cash withdrawals when they are unusual and out of keeping with the normal running of their account.”
ATM issues continue
The problems encountered by the Bank of Scotland, Halifax, HSBC, Lloyds and TSB ATMs may have been less notable, if only because a string of IT problems have plagued UK banks in recent years. Though, in the case of these banks, actions to resolve the issues were greeted more positively.
Paul Pester, CEO of TSB, took to Twitter to personally apologise for the outage, and to deal with real-time customer concerns.
My apologies to TSB customers having problems with their cards. I’m working hard with my team now to try to fix the problems. PDP
— Paul Pester | (@PaulPester) January 26, 2014
Pester updated customers as to when the problem was fixed, responded to a consumer suggestion by updating its automated telephone messages and apologized to frustrated customers who reported point-of-sale disturbances and call centre issues.
@Hardbyte sorry Craig. At one point we had 300 customers queuing to speak to the call centre – sorry if you couldn’t get through. PDP
— Paul Pester | (@PaulPester) January 26, 2014
A call to action
In the ensuing unrest, the virtual currency community has used the issue at hand to illuminate those who are dissatisfied with the current state of the banking industry, yet uninformed about available alternatives.
Evan Rose, president and CEO of BitcoinATM, spoke to CoinDesk about how his industry can learn from such issues. Rose noted that although the bitcoin ATM industry isn’t immune from the issues experienced by these banks, it does benefit from “a clean design slate”. He said:
“Whereas much of the infrastructure surrounding traditional ATM networks is grounded in technology 20+ years old, we took the opportunity to build our service from the ground up with absolute redundancy and availability in mind.”
“Much of the bitcoin ecosystem is being built in a similar manner, which has the potential to give bitcoin companies a leg up over the traditional services customers are accustomed to.”
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