When Bread — formerly Alliance Data Systems — recently
Those efforts suffered a setback this week when the online credit card bill payment site for Bread’s Comenity Bank subsidiary went offline after a technical update, leaving some customers unable to pay their bills online for a few days.
The bank used Twitter and its direct online channels to notify customers of the problem and urged them to call Comenity’s automated voice response system. That messaging unleashed a flood of complaints on social media from consumers who were unable to reach anyone to confirm whether payments had been received.
“Until we restore full service, we will not charge a pay-by-phone fee when you make a payment with one of our representatives,” Comenity said on some private-label retailers’ websites through Thursday.
The glitch underscored how quickly a technical outage can sour customer attitudes at a time when the expansion of streamlined, digital platforms have led many consumers to expect an almost flawless banking experience.
In the case of Bread — which has been racing to upgrade older, legacy systems with nimbler, digital tools to keep pace with the pressures of the booming BNPL industry — its outage for credit cards attached to stores like Victoria’s Secret and Talbots couldn’t come at a worse time, according to some observers.
“Many consumers are living paycheck to paycheck, and when companies lose consumers' trust in handling payments quickly, they're going to lose share of wallet," said Daniela Hawkins, managing principal at Capco, which provides strategic consulting for financial institutions.
On Monday, Bread completed the full conversion of its core processing platform, but after the conversion there was a disruption of customer care capabilities, said Rachel Stultz, Bread’s director of corporate affairs, via email. The disruption was not related to any cyber attack, she confirmed.
Stultz on Friday morning said online account access had been restored Thursday night, noting that Bread would waive late fees for customers whose payment dates fell on June 27 or June 28.
Several customers on social media reported
Many banks that haven’t completed their conversions to modern, cloud-based platforms will face similar reputational risks should their systems crash, particularly as the economy tightens, according to Hawkins.
“Many financial institutions have hybrid situations where part of their systems are modern and agile but in other areas they’re pulling functionality from old mainframe systems and it makes them vulnerable to outages that consumers simply can’t afford,” Hawkins said.
Customers of VyStar Credit Union in Jacksonville, Florida, vented on social media and on news media websites beginning in May when they were
The crisis occurred as VyStar was negotiating a merger with Jonesboro, Georgia-based Heritage Southeast Bancorporation. Both parties
Bread has had a rough road lately, as longtime retail partners including Pier One went bankrupt during the pandemic.
CEO Ralph Andretta, who
But with a company like Bread whose roots date back to the 1980s, technology changes are bound to be complex, costly and time-consuming, according to Richard Crone, a principal with Crone Consulting LLC.
“The whole payments industry is migrating to cloud technology, and consumers have steadily become accustomed to expect transactions and other services to happen near-real time, with digital channels to quickly resolve problems. A glitch where consumers can’t get answers is much worse now than it would have been even a year ago,” Crone said.
Lenders experiencing technical glitches affecting customers’ access to funds also run the risk of attracting regulators’ scrutiny, according to Crone.
But the biggest problem for Bread or any financial institution whose customers can’t immediately transact is losing market share in the rapidly evolving digital ecosystem, he said.
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