A comprehensive review of the IT infra of banks that supports digital transactions, is needed
The RBI’s action last week in asking HDFC Bank to stop sourcing new credit card customers and to halt digital business generating activities until it addressed the gaps in digital infrastructure, is a welcome sign that the central bank is taking note of the difficulties being faced by customers of this channel. It is hoped that this is a precursor to similar actions against other financial entities involved in digital payments, which have been making the most of the rapid growth in business without possessing the required infrastructure to support the expansion. The central bank’s action against HDFC Bank was due to certain glitches and outages in its internet banking, mobile banking and payment utilities over the past two years, including the recent outage in the bank’s internet banking and payment system on November 21, due to a power failure in the primary data centre. The RBI Governor is right in saying that lakhs of customers of digital banking cannot be allowed to be in difficulty for hours together, especially when the central bank is laying so much emphasis on digital banking.
It is therefore obvious that banks, NBFCs and other financial entities have to invest more in their IT systems, upgrade the technology in order to meet rising customer expectations and make the systems robust so that they retain the trust of the public. It is good that the RBI is proposing to issue Digital Payment Security Controls Directions, 2020 for ensuring stronger security controls for channels like internet, mobile banking, card payments, among others. But the central bank should also consider conducting a comprehensive review of the existing IT backbone supporting the digital payment channels of all financial institutions, to gauge their ability to meet the expected surge in usage in the coming decade. Piecemeal action against individual banks may not really serve in making all entities fortify their IT systems, before trying to garner a chunk of this growing pie.