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Senior executives at Mizuho Financial Group Inc. will face pay cuts for a series of technology fiascos at its banking subsidiary that have been blamed in large part on its corporate culture.
Repeated system failures at Mizuho Bank have blocked thousands of payment cards and passbooks in mega-bank ATMs.
On June 15, MFG said that Tatsufumi Sakai, chairman of the group, had received a 50% pay cut for six months, while the salary of Koji Fujiwara, chief executive of Mizuho Bank, would be cut in half for four months.
Nine other executives, including those in charge of the systems department, will also benefit from salary cuts.
Fujiwara was to resign to take responsibility for the system failures, but the company will wait for its decision until the Financial Services Agency issues a business improvement order for both Mizuho Bank and Mizuho Financial Group on the basis of the banking law.
The group will work as one and strive to avoid similar mistakes, Sakai said at a press conference.
He also said he would change the composition of the leadership if necessary.
A group of third-party experts released a report on June 15 investigating the four large-scale system outages at Mizuho Bank since late February.
The report states that no common technological cause was found for the four incidents. Instead, he concluded that human issues were largely to blame, such as a lack of awareness of the impact on users, organizational weakness in crisis response, and inadequate management control. system, including insufficient deployment of IT specialists.
The report states that these problems are not easily resolved due to the corporate culture of the banks.
The report found that 1,821 similar incidents involving faulty ATMs occurred in 2018, but the bank did not improve the situation.
We caused a lot of inconvenience, but we looked away, Sakai said.
In response to the report, Sakai said the company would change the specifications of its ATMs.
The company will also hire a senior manager from IBM Japan to assist the head of the Mizuhos systems department and strengthen the development of IT specialists.
In addition, MFG will set up an organization to analyze social media and appoint executives for crisis management to improve customer services if another system failure occurs.
The FSA conducted a full-scale investigation and interviewed people, including those from outsourcing companies, to find the root cause of the problems at MFG.
A representative of the FSA said the corporate culture of the financial group makes it difficult to manage the insufficient number of staff in its IT department and correct its dismal post-crisis customer service.
It is important for companies to improve the underlying corporate governance, said the representative.
The FSA will urge companies to submit an improvement plan that includes clarification of responsibility for system failures and measures to prevent a recurrence.
Mizuho Banks’ IT system failures also occurred in 2002 and 2011. The bank renewed the system in 2019.
(This article was written by Kuniaki Nishio and Yuji Yamashita.)
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