Addressing the evolving challenges in the financial sector, M Rajeshwar Rao, Deputy Governor of the Reserve Bank of India, emphasized the urgent need for enhanced cybersecurity and robust fraud prevention measures in the banking industry.
In his speech at the FIBAC 2023 conference, co-organized by FICCI and IBA, Rao highlighted the shift from traditional banking to marketplace-based models, driven by technology and changing consumer preferences. While acknowledging the benefits of this evolution, he stressed the heightened risk environment it creates, making banks more susceptible to cyber threats and fraud.
“Customers today are facing threats from technology induced frauds such as fraudulent apps, breach of privacy and deep fakes. Even mis-selling has emerged in a digital avatar now – called Dark Patterns. Dark Patterns are design interfaces and tactics used to trick users into desired behaviour such as availing high-cost short-term consumer credit masquerading as an instant loan. We must work hard, work smart and work together to protect customers from these threats to retain and strengthen their trust,” Rao said.
Rao advocated for a holistic approach involving stringent cybersecurity protocols, regular risk assessments, and robust fraud detection mechanisms. “While we laud the fact that next-gen banking is fast becoming a reality, aided by innovations in the fintech space, we also need to continuously work to redefine the regulations and the regulatory frameworks to support these innovations and deliver on our mandate of financial stability while protecting the customers. At the same time, the innovations and collaborations need to be well thought out, risks properly analysed, and mitigation plans put in place before offering them to customers,” he added.
The Deputy Governor also underscored the importance of customer-centric strategies in banking. He pointed out that banks need to be more responsive to customer needs, particularly in grievance redressal. Effective complaint resolution mechanisms are essential, not only for customer satisfaction but also for maintaining trust in digital banking services.