Last week, the RBI was forced to ask one of India’s top privately owned lenders—the HDFC Bank—to temporarily stop all launches of new digital businesses and sourcing of new credit cards after the bank suffered a data outage that disrupted its net banking and debit card payment systems. HDFC’s customers were not the only ones who suffered on account of technical glitches.
The country’s largest bank, the State Bank of India, too suffered a meltdown of its mobile banking operation soon after the RBI ruling. A data outage by a major bank now becomes not only a headache for the bank concerned but for the tens of millions of customers who depend on digital banking to do their business. It can result in losses of billions of rupees on account of foregone or delayed financial transactions.
The use of mobile banking and contactless payments have surged since the pandemic broke out. According to a survey done by US-based financial technology firm FIS, some 68% of Indian consumers now use online or mobile banking to conduct financial transactions. The safety of banking software and digitised banking and their ability to function have now become as important for the economic life of the nation as its currency system, since digital money is fast becoming the new currency.
While the data outage at HDFC and SBI were in all likelihood because of a system overload or other software glitches, a cyberattack that causes Indian banking software to collapse will be a new threat the country’s security planners will have to factor in for the future.
Just as in the case of a stock market or major power grid collapse, a digital banking failure could be cause for great panic in the future. It could also be an opportunity for criminal groups to break in and manipulate data. Under the circumstances, it becomes the bounden duty of banks to constantly upgrade and monitor the functioning of their financial technology to protect themselves and customers.
At the same time, it also becomes the RBI’s overarching duty to have a hawk’s eye trained on them and swiftly pull up and punish laggard banks whose laxness could compromise the nation’s digitised financial architecture.