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ATM disaster plans for dodging hurricanes, other misfortunes

When Hurricane Ivan brushed the Mississippi Gulf Coast in mid-September, banks in South Mississippi were prepared for potential automated teller machine (ATM) malfunctions.

“ATMs and telephones are the most important things to keep up because that gives people access to information and cash,” said John M. Hairston, executive vice president and COO of Gulfport-based Hancock Bank. “If they can get cash and information, they’ll be OK.”

Hancock Bank’s data center, where all of the bank’s core computer systems operate, runs on a UPS (uninterrupted power supply) battery system. During power interruptions, the emergency generators crank into gear, with about 3,000 gallons of diesel fuel on hand “to last long enough for us to bring in more fuel,” explained Hairston.

“Those generators power all critical situations ranging from the hurricanes of late to someone running over a telephone pole, which happened last Friday night,” he said.

“In 1999, the eye of Hurricane Georges came right over the top of our building. When the power went out, we expected it to last for six to eight hours. However, our telephone lines never went down so the ATM machines that had power kept running.”

Odean Busby, president of Priority One, said the Magee-based community bank doesn’t have backup generators at individual branches to keep ATMs functional.

“Typically, if an ATM in one part of town gets knocked out, chances are that one close by is working,” he said. “Unless you’re in a path of total destruction, everybody’s usually doesn’t get knocked out. Also, the customer has the option of using any other ATM in the area that may be up and running. I think that’s the case for most people, especially community banks like ours.”

The most common reason an ATM goes down is because it runs out of money or has a mechanical failure, said Hairston.

“In our case, ATMs go down so rarely that our service level on them is 99.9%,” he said. “Occasionally, an ATM misbehaves because it has a mechanical problem, but when one falls below a 97% service level in a month, we consider it a critical failure and have it gutted. The only normal down time on an ATM is the few minutes at two or three o’clock in the morning when we’re backing up the system.”

At Priority One, network and software problems, not weather- or fraud- related issues, usually account for individual ATM failures, said Busby.

“But that’s rare,” he said. “There’s typically little down time on ATMs because the machines in service now are very reliable 24/7.”

Fire or regional disaster, followed by power failures and downed telephone lines, are the most common reasons an entire ATM network goes down.

“For example, when PULSE, one of the largest data networks in the system, took water during the Houston flood three years ago, the whole network was affected,” said Hairston. “Customers in our service area could use our ATMs just fine, but if they were in another city, like Chicago, they couldn’t access our bank using someone else’s network.”
At the data center in Gulfport, one computer operates all the bank’s ATMs. If one side fails, the other side takes over.

Also, the bank has a dedicated phone line from the facility to the BellSouth network, which connects to the ATMs and external networks, such as VisaNet and Banknet, explained Hairston.

“Even though it’s highly unlikely, if the main switch at BellSouth went under water, for example, we’d relocate operations for ATMs in other systems through Sungard (an IBM mainframe Disaster Recovery Service) in Chicago,” he said. “It would take us 24 hours or less to do that. When Sungard updates their equipment in Atlanta, we’ll move our processing from Chicago, and it will take even less time to reconnect.”
During Hurricane Ivan, a staff of 30 was stationed in Hancock Bank’s data center, with backup personnel on call in different counties and parishes “so that if we had a significant issue here, we’d have people who could get to Chicago and bring those systems up,” explained Hairston. “We’ve had computer systems at Hancock since 1963 and we’ve never had to move operations to Chicago, even during Hurricane Camille in 1969.”

Because each ATM costs a bank between $25,000 and $35,000, it’s not a moneymaker.

“You’ll hardly ever make enough on a foreign transaction interchange (a surcharge for non-bank customers) to cover the expenses, including line, network and other related costs,” said Busby. “But they’re an incredible convenience for our customers.”

Contact MBJ contributing writer Lynne W. Jeter at lwjeter@yahoo.com.


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