Inadequate measures against cyber crimes threatens progress of technology in financial sector

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According to the latest financial news, technological interventions that are gradually making an entry into the global financial sector, including big data, artificial intelligence, blockchain technology and internet of things, promise far greater convenience in day-to-day banking transactions for customers. Cutting-edge technology is being leveraged by financial institutions across the world, with the ripple effect expected in India.

SEE ALSO: 55% Hike in Digital Transactions and 122% Rise in Mobile Banking in India this Year

A few examples of this are:

  • Spain’s CaixaBank is in the process of launching a mobile-only bank called imaginBank, which will use Facebook, Twitter and mobile apps to connect with its customers in a move the bank says is aimed at young, ‘digitally native’ consumers. The Spanish bank is one of the country’s three biggest financial institutions and the move is aimed at connecting with customers in the 18-35 age bracket. imaginBank offers everything via apps on mobile devices and social media
  • *RBS has trialled “Luvo”, an AI customer service assistance as an interface with staff and to potentially serve customers in near future while Spanish bank Banco Santander has announced plans to provide secure transactions using voice recognition via its banking app
  • Banks in India, including HDFC Bank, are reportedly working on plans to introduce automation via robotics on the lines of what the Japanese banks are doing

Measures against cyber crimes threatens

The increasing reliance on technology in the banking sector in India is already evident in bank statistics, according to information provided by Reserve Bank of India Deputy Governor SS Mundra at the ‘International Seminar on Cyber Risk and Mitigation for banks’ organised by CAFRAL on September 7.

So, while the future may be promising for consumers, there are some obvious downsides to all of this. Alongside the increased use of internet banking and mobile banking-based payment tools, increasing concern is being expressed by the banking regulator on the lack of Board-level oversight on cutting-edge technology-linked services and the product vendors offering these solutions, especially those on the cusp of being deployed for commercial use.

With the attempted $951-million Bangladesh Bank heist providing an alarming backdrop, banking sector players in India have indicated that the RBI is strongly prodding banks to step up the vigil against cyber crimes, a growing bugbear for consumers. As a concrete step in this direction, banks have been specifically directed to put in place a security policy enlisting the strategy to combat such threats, duly approved by their Boards, by September 30, 2016.

Among the RBI’s initiatives, alongside the IDRBT — which is primarily a banking research institute established in 1996 by the RBI — the central bank has also established a new institution, the Reserve Bank Information Technology (ReBIT) Pvt Ltd, as its wholly owned subsidiary, for stepping up focus on cyber security and for building cutting edge capabilities for supervising financial technology usage in the sector. The RBI, it is learnt, has also constituted a working group on financial technology, “to fully understand the new paradigm of Fintech and to chart out the best way of using it”.

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