Importance of Background Verification in BFSI Sector
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The point of an exponential boom in any industry is crucial for two reasons. Expectedly, it opens the industry and stakeholders to unprecedented growth and innovation. Consequently, it exposes the pitfalls that the development process fell short of putting trustworthy coping-up measures against. The story of the Indian BFSI sector is not any different.
Growing disposable incomes, rising rural penetration, an extension of mobile and internet banking facilities and healthy regulatory oversight have been key to the growth of the banking sector. An IBEF report estimated that the value of public sector bank assets increased to US$ 1.56 trillion in FY18 from US$ 1.52 trillion in FY17.
The surging internet usage; increase in the FDI investment limit to 49per cent and flexible regulatory laws have led to the massive growth of the insurance industry in India, expected to reach US$ 280 billion by 2020, a report by IBEF states.
Riding on factors such as stress on PSUs, lean cost structures, better product lines and risk management capabilities, distribution reach to sectors and areas that traditional banks are unable to penetrate, NBFCs have witnessed growth in their lending capabilities to the tune of 18per cent in the past 5 years.
Technology: Overarching Cause of Disruption in BFSI
Along with business growth and economic factors, the real disruption in the BFSI sector happened when technology stopped being a mere cog in the strategic wheel of the financial services sector. India’s FinTech software market alone could touch US$ 2.4 billion by 2020, tapping at twice the current rate of growth, a report by NASSCOM predicts.
The technological advancements in Artificial Intelligence, Robotics, Blockchain, Machine Learning and Internet of Things require new skill sets, creating scope for employment of cybersecurity experts, credit analysists, blockchain architects, robot programmers, data scientists and analysts and client engagement managers amongst others. A FICCI-NASSCOM report states that by 2022, 15per cent-20per cent of the Indian workforce in the BFSI sector would be deployed at these new jobs; some of these roles being touted the highest paying roles in the sector by industry experts. The s2.11 trillion PSU bank capitalisation plan announced by the Union Government is expected to push the GDP growth by 7per cent, generating even more employment in the sector. The new jobs, however, are also bringing new threats to an industry already vulnerable to frauds and scams.
All is Not Well
Cases of cybercrimes, asset appropriation, identity thefts, money laundering and accounting frauds are not unheard of in the BFSI sector. What might be shocking for the industry that relies heavily on internal hiring is that more than 50per cent of all frauds are estimated to have been committed by an insider?The recent, high-profile case of a willful defaulter at one of India’s leading public sector banks revealed that the fraud was committed in connivance with several senior officials of the bank. Many reports published on Employee Background Verification also points to a worrying trend emerging in the BFSI sector. At 11.46per cent and 10.13per cent respectively, the sector saw one of the highest discrepancy rates across industries for the financial years 2017 and 2018. Simply put, the numbers of people lying on resumes or misrepresenting their credentials were found to be higher in the BFSI sector than most others.
Background Intelligence Can Nip the Problem in the Bud
Robust tech systems, regulatory amendments for safety and educating consumers and staff are all good goals to have for the overall health of the sector. What is paramount is to ensure that the industry is driven only by an ethical workforce that can be trusted with customers’ financials and their information and can be relied upon for safeguarding company’s assets and investments and for implementing best practices in banking and money transfer. Without a principled workforce, no measures for improvement will prove effective.
In the present environment, Background Intelligence, facilitated by technology, data and speed become crucial to build trust and to allow brands to conduct business with confidence. The trust deficit being faced by the BFSI can be solved through thorough Identity, Profile and Reputation verification.
Back to Basics
Hiring a reliable workforce and building relationships with genuine clients, suppliers and partners is of utmost importance for the success of any business. The BFSI sector is waking up to the possibility of adopting pre-emptive measures, using the latest employee background verification. The tech solutions are continually evolving to make the process of background verification simpler, less prone to errors and more reliable as they have been getting more intelligent with time. Disruption in the BFSI sector calls for disruption in the supporting systems, and the background intelligence industry is fully-armed to rise to the occasion.