January 7, 2023 / VOLUME NO. 243

The Cost of Doing Nothing 

A winter storm rolled through much of the United States before the end of 2022, paralyzing holiday travel and leading to thousands of flight delays and re-routings. But only one airline experienced prolonged paralysis and a public meltdown. 

Southwest Airlines Co. canceled more than 13,000 flights in less than a week, according to a National Public Radio interview with Southwest CEO Bob Jordan. Much of this delay came after the worst weather subsided. Early reports faulted “an outdated crew scheduling system” that wasn’t flexible enough to keep up with the constant demands. Executives gave the system a hard reset, causing a massive, days-long reduction in schedule.

With so many stranded during the busy holiday travel season, the U.S. Department of Transportation and lawmakers got interested. Jordan acknowledged the extent of the disruption and said it can’t happen again.

It appears that Southwest finds itself in the same quandary that many banks do: balancing the existing shortcomings of legacy technology versus expensive wholesale upgrades that may be risky, too. 

“This problem — relying on older or deficient software that needs updating — is known as incurring ‘technical debt,’ meaning there is a gap between what the software needs to be and what it is,” wrote Columbia University Professor Zeynep Tufekci in an opinion column for The New York Times. 

One bank that has come under recent scrutiny for technology failures is Wells Fargo & Co., which was ordered by the Consumer Financial Protection Bureau to pay $3.7 billion for allegedly charging borrowers erroneous fees and interest rates. CFPB Director Rohit Chopra said in a statement that while Wells Fargo focused on product launches and growth initiatives, borrowers were wrongfully losing homes to foreclosure and had their cars repossessed due to bank error. Wells Fargo CEO Charles Scharf said in a statement that the bank is pleased to bring closure to many issues that had been outstanding for years.

Investing in technology upgrades is expensive — especially when legacy technology works most of the time. But as Southwest and Wells Fargo demonstrate, the interest paid on carrying that technical debt can be more costly than doing nothing.  

• Kiah Lau Haslett, managing editor of Bank Director

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