Several major banks in the Philippines experienced significant outages recently due to a sweeping technical glitch caused by the cybersecurity software ‘Falcon Sensor.’ This disruption, part of a global IT meltdown, caused widespread inconvenience for customers worldwide and highlighted the vulnerability of interconnected digital systems.
The global IT meltdown caused by ‘Falcon Sensor’ exposed vulnerability in banks’ digital systems
Aside from banks, the ‘Falcon Sensor’ crash affected practically everyone who uses Windows — a wildly popular operating system that supports loads of devices and companies.
Falcon Sensor, and insights from industry experts
The issue, which is traced back to CrowdStrike’s Falcon Sensor, led to unexpected machine reboots and operational disruptions last July 19. This software reportedly caused Windows systems to crash with the infamous “blue screen of death,” affecting sectors worldwide, including banks, telecommunications, and airlines.
Dan Coatsworth, an investment analyst at AJ Bell, shed light on the broader implications of this incident. “The world grinding to a halt because of a global IT meltdown shows the dark side of technology,” Coatsworth remarked.
He also emphasized the critical nature of the disruption’s duration, stating, “The severity of the problem boils down to how long it lasts. A few hours’ disruption is unhelpful but not a catastrophe. Prolonged disruption, however, is another matter.”
Satnam Narang, a senior staff research engineer at cybersecurity firm Tenable, provided further insights. “While the issue is associated with Windows systems, it does not appear to be an issue with Microsoft Windows, but rather, security software installed on millions of Windows computers worldwide,” Narang explained.
Narang further highlighted the risks posed by the affected software, stating, “Because this is a security software, it requires a higher level of privileges to the underlying operating system. So, a bad or faulty security update can eventually result in a catastrophic impact.”
In 2022, Dale Jose, the National Technology and Security Officer of Microsoft Philippines urged the government to establish consistent security baselines for critical infrastructures such as transportation, banking & finance, water, energy and telecommunications industries. He also highlighted the need for companies to practice “cyber hygiene” or the practice of enabling multifactor authentication and using modern antimalware and data protection. “No matter how much digitalization you do, if you do not have a solid cybersecurity foundation, it will hinder its growth,” Jose said.
Impact on Philippine banking services
On July 19, several major banks in the Philippines confirmed that their services had been affected:
BDO Unibank advised clients of extended wait times at branches and contact centers, along with delays in some digital channel functions. By 8:24 PM of the same day, BDO reported that its digital channels had already been restored successfully.
Bank of the Philippine Islands (BPI) acknowledged the issue in an advisory, noting that it impacted certain operations, leading to longer wait times in branches and contact centers. Customers were also warned of potential delays in financial transactions such as bill payments and interbank fund transfers. Despite the disruptions, BPI assured that its branches, ATMs, cash accept machines (CAMs), and online and mobile banking services remained available.
Metropolitan Bank & Trust Company (Metrobank) reported a slowdown or temporary unavailability of some online services, though its ATMs and CAMs stayed operational.
Union Bank of the Philippines (UnionBank) mentioned that its customer service hotline, some branch services, and online credit card transactions were temporarily unavailable. However, its app, website, and ATMs were still functional.
Both the Land Bank of the Philippines (Landbank) and Rizal Commercial Banking Corporation (RCBC) experienced system outages but announced the restoration of their online banking services shortly after the initial disruptions.
Response and Recovery
For its part, the Bangko Sentral ng Pilipinas (BSP) issued a statement confirming its close monitoring of the situation. It required affected BSP-Supervised Financial Institutions (BSFIs) to provide updates and activate resilience and continuity plans as needed.
Despite the widespread disruptions, the BSP Peso Real Time Gross Settlement System, PhilPassPlus, remained unaffected, with all PESONet, InstaPay, ATM, and check settlements completed for the day.
This global outage underscores the critical dependency on digital infrastructures and the potential risks posed by cybersecurity software failures.
As technology continues to integrate deeper into financial systems, the importance of robust and resilient IT strategies becomes ever more crucial. Financial institutions are likely to review their cybersecurity measures and contingency plans to prevent such widespread disruptions in the future.
The incident serves as a stark reminder of the need for continuous vigilance and improvement in cybersecurity practices to safeguard against the vulnerabilities exposed by this global IT meltdown.