Digital Banking: Know Your Transactions

While India is turning digital and attempting to become a formidable player in the global arena the road ahead seems too bumpy and accomplishing it poses a huge challenge. The problem lies not in the intent but in the process of implementation and inherent constraints. Even the worst critics agree that given the difficult and varied geographical terrains, uneven levels of literacy and constraints in resources and infrastructure we have come a long way and ours is a work in process.

The banking sector in India with its predominantly public sector characteristic was one of the early players to adopt technology but the pace remained rather slow on account of a host of internal as well as external factors. What dramatically changed the rules of the game was the entry of new generation private players armed with technology which changed the protocol of banking operations. The concept of ‘Anywhere Banking’ in a networked environment gained momentum and found overwhelming customer acceptance. India’s gradual emergence as a software giant also changed the social context and the benefits of use of technology got greater visibility. Competition and customer service became the buzzwords in the banking sector and compelled public sector banks to adapt to the change and stay relevant. Transaction time and cost got reduced, the payment system became world class and movement of funds became smooth.

Newer technology paved the way for electronic banking popularly known as digital banking and the penetration of this new mode involving faceless transactions became quite common. ATMs, cash dispensers, NEFT, RTGS, credit cards and debit cards etc. became terminologies which no longer needed explanation for a general customer. Systems and procedures to regulate such transactions, Safety norms, consumer protection and grievance redressal mechanisms were put in place to address the downsides and also develop public trust.

It is amazing to see how despite being a largely cash-based economy digital banking has grown significantly in India in a comparatively short time. Data speaks for itself. The recent data released by National Payments Corporation of India (NPCI), indicate that the Unified Payment Interface (UPI), which is the payment platform of NPCI, recorded volumes of 1.61 billion transactions worth Rs 2.98 trillion during August 2020. This platform also succeeded in onboarding people on a large scale both in the online as well as in the offline segments. Such increases are visible in all types of payment modules; in online transactions, in utility services and so on.

A combination of factors, including the enabling policy support, contributed towards this transition. While RBI-introduced technology driven institutions like the payment banks, mobile banking and payment wallets getting into the digital banking space, government departments both Central as well as State, public utility services like water, electricity, telephone and other services also shifted focus and moved towards electronic platforms incentivising digital transactions. On their part, the banks as well as payment service providers took several initiatives to create awareness about their products. An indirect push towards the digital mode was also witnessed during the demonetisation period and the icing on the cake has now come through the pandemic.
Close coordination between the government, RBI, commercial banks, payment service providers, utility service providers etc. have helped to create an environment from where the volumes can only go northwards. Seemingly, the ease of transaction and operational convenience has succeeded in breaking a psychological barrier.

Despite all these positives and optimism the most worrisome aspect is the increasing cyber crime graph. The closer one moves towards sophisticated technology the risk of vulnerability gets enhanced. Banks, payment service providers and all the other stakeholders have put in place very strong risk management practices and safeguards. Yet cyber crimes are happening and instances of hacking are quite common.

That leads us to not one but several questions. Where does it leave the common person if there is an unauthorised withdrawal? Is she fully aware of all the implications while doing a financial transaction digitally? Has she been adequately cautioned about the pitfalls in case there is a compromise involving the safety protocol? Where does she go to lodge her grievance? What is the legal recourse available in case of a loss? Does she know whether her financial data and other personal information have been shared with third parties?

All of us know that unsolicited calls are received on our mobiles almost on a routine basis with the caller trying to sell products ranging from insurance to jewellery. At times the caller dupes us to believe him/ her and in one such moment of greed we fall for it and part with our confidential information. How many people really wonder about the source from which the caller got the mobile number and how vulnerable is the personal data? Are we not sharing our mobile numbers with the shop while purchasing something where it is almost mandatory now to share it so that we get a reward point!

The risks involved in digital banking transactions are very much real. But the overall benefits, the image of those long queues, hours of waiting, delayed remittances etc. negate the whole thought of branch banking unless absolutely needed. There is a clear realisation now that digital banking is the way forward.

In all probability the literate and more aware customers can manage these inherent risks, but what about the 400 million account holders under the Pradhan Mantri Jan-Dhan Yojana? The answer to this dilemma perhaps lies in creating greater awareness about the downside and the safety protocols. All stakeholders will do a great service to the common person if the awareness messages reach the last mile. Customers on their part may also think of a reality check by carrying out a KYT (Know Your Transaction) like banks do their KYC. What comes to mind is a recent TV advertisement with a bunch of young international cricketers discussing a banking-related problem and finally saying ‘RBI Kehta Hai’ which aptly sums up the essence.