The Cyber Security Woes in Digital Banking
Earlier, people used to go to a branch and spend considerable time to get a loan or to do any other banking activity. There was a lot of paperwork that we had to do regarding withdrawals etc., which was quite cumbersome. Moreover, the entire country worked on those lines, which was acceptable. It got changed when it became more like a hybrid situation. People started using more ATM cards, digital services, online banking, and mobile banking as parts of banking.
So there was one set of customers who would always want to go to a branch because they felt quite trusted. They thought that the transactions they would do face to face were more trustworthy than doing via digital medium. There was also a lot of ignorance regarding how to use the technology, and people were scared. A lot of e-Commerce started with an option of cash on delivery. People felt more trusted to pay after receiving the parcel. Hence, an evolution occurred when somebody spent money, not only on the financial segment but also on e-commerce. There was a slow trust, which was built over a period of time.
Importance of cyber security in the financial sector
Now, a large part of the community is involved in online transactions where two things are crucial – how to use technology/ application, and how to secure those transactions. People are educating each other on how to use any particular technology or app. However, the security part is always challenging because we learn in the hard way.
Even though the government has started many programs to educate people about the various challenges, which were limited, and there was a need to use the platform. People always have an apprehension that they may get hacked if they use technology. Due to the pandemic and inaccessibility of the banks, people had to rely on technology. After that, the security conversation became more robust and a different angle got introduced in the financial institution.
Unlike any private and public sector banks, people didn't find any visible security in the digital part of banking platform with more security features can build digital trust. Hence, cyber security in the financial sector is the backbone which needs to create for the consumer to interact with the bank or any financial institution, using the internet or mobile apps to do back and forth. People need to be assured that their transactions are secure while using any particular platform with a robust cyber security background.
Challenges Involved in Digitalizing Banking Activities
When we compare pre-digitalization and post-digitalization, the identity validation process for opening a new account or banking activities has changed. Before, there was requirement of physical contact details, which came through a reference once the person was introduced to the bank. Then all of his documentation or KYC would be documented in the bank. Hence, human identity became a very integral part of every system.
Now, the biggest challenge in digital banking is identity security, which was comparatively more manageable in the offline banking system. Digital banking is still grappling with the challenge. And there is a lot of evolution in the identity security part which are coming up. Other challenges could be from a connectivity perspective, such as connectivity issues while travelling and getting SMS or OTP on the digital platforms.
Cybercrime is committing fraud, violating privacy, or stealing identities. Since all the information and services have been digitalized, the risk has increased considerably for both the bank and the consumer. Fraudsters are known to be imaginative in their endeavours to siphon reserves, either as enormous sums in a discharge, or tiny sums from a great many accounts, over a significant stretch of time.
Advantages of Digitalization in the Banking Sector
The need to improve customer services and computerize the recording and accounting of data took place when private and foreign banks entered into the market. This intended to provide digitalization and enhance customer service compared to the ones provided by public sector banks.
Now, the use of physical cash has become lesser than digitalized cash. Digitalization has made it easier and more convenient for customers and financial institutions. Services like NEFT (National Electronic Fund Transfer), RTGS, etc., have made the transaction process much more manageable.
It has offered us many services that include maintaining our records, tracking our spending, and budget planning. A lot of digital data is available with banks, from which they can make data-driven dynamic decisions by using digital analytics. This is an advantage for both customers and banks.
Ways forward of implementing a cybersecurity system in digital banking
It is quite safe to say that digital banking has gained immense popularity among customers during the pandemic. Several challenges have been faced by the companies and organizations, including global banking infrastructure, regarding security and infrastructure availability.
We all are aware that multi-factor authentication is expensive, but the efforts are worth it for digital banking. Activating the multi-factor authentication ensures an additional layer of protection to the customer login process rather than just using a single password, which can easily compromise digital banking cyber security. Hence, it is highly recommended to use multi-factor authentication for a much safer method of customer login.
The hotspots for cybercriminals are digital transactions through merchants, banks, card brands, and payment gateways. So far, this is the major concern for financial institutions. The best solution to make digital banking safer is the end–to–end data encryption. This practice takes data safety to the next level and requires significant checks and tests.In order to ensure end–to–encryption, several algorithms can be utilized. If TLS protocol is used, computer networks can be made more secure.