Banks should fortify cyber security as fraud cases rise: RBI

Mumbai: The RBI on Thursday said that the banks should focus on fortifying cyber security and prevention of cyber frauds to safeguard their customers from rising incidents of fraud and data breaches.

RBI Deputy Governor Rajeshwar Rao, in his address at the FIBAC 2023 conference, on Thursday said that the banking landscape is fast evolving with increase in financial inclusion, customer access, product choices, and convenience.

“However, the risks to the consumer have also increased with increasing instances of frauds and data breaches,” he said.

He said that bank customers today are facing a threat 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.

He said that a key element of protecting customers is to provide them an efficient, prompt and cost effective grievance redress mechanism.

“Unfortunately, it appears that the efforts of the banks to provide timely solutions to customer grievances have not kept pace with explosion in technology and products.

“While banks are hugely invested in forging new and innovative ways of customer acquisition, very little thought seems to be going on improving the customer grievance redress mechanisms,” he said.

“This seems very odd for a sector which prides itself on being a service industry. We definitely wish to see more serious thought and intent emerging from the Boards and top executives on quality of grievance redressal instead of just monitoring TAT and MIS on complaints,” Rao said.

He also emphasised the need for banks to bring in greater empathy into their services, products and operations.

“For example, there is a need for greater effort to provide safe and friendly tech-banking to senior citizens. Banks must require their employees to treat senior citizens, people with special needs, those that are technologically challenged or someone who may need help otherwise with special care and empathy,” Rao said.

He said that the boards must ensure that their access points – branches, websites, and apps are user friendly and convenient for the customers with special needs.

“From the regulatory side, we are taking up these subjects more vigorously in our interaction with the industry but there is also a need for a cultural and attitudinal change within the fraternity that I would like to emphasise,” Rao said.