Fenwick payments practice chair Dan Friedberg talked to American Banker about the recent wave of outages affecting major bank websites and smartphone apps, and what the recourse may be for those institutions to recover financial losses.
Friedberg, who has advised banks and technology firms on vendor contracts, pointed out that contracts between banks and technology vendors are normally drafted in a way that makes it difficult for banks to sue for damages.
He noted that while insurance is available for these situations, most banks usually don’t purchase it.
“The general rule is that the bank will be suffering this loss and can’t pass it on to its vendors, and the costs will be financially material to earnings. Typical software contracts are really sided on behalf of the tech developer," Friedberg told American Banker.
The full article is available on American Banker (subscription required).