Banking Industry, Startups Face Growing Cybersecurity Threats
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The advent of technological innovation has created many venues in the financial technology space and has transformed businesses across sectors. It has paved the way for startups to successfully run their businesses which has enabled them to gain momentum in the market in a short period.
Fintech firms such as PayPal, Paytm, PhonePe, MobiKwik are some of the examples that have changed the face of how transactions are being conducted. Not only that, but the traditional banks in India have also revamped their operations and many of them have launched apps in order to provide better facilities to their customers.
With the banking industry witnessing a paradigm shift in its offerings and trends, there has been growing concern about cybersecurity breaches. Drastic change such as digital shift has provided much impetus to the startups to scale up their business, however, they also gradually face the threat of cyber attacks.
India, which is home to some of the top tech solution firms globally, is also one of the major victims of cybersecurity attacks. These attacks on institutions are raising alarming bells for Indian companies.
According to Deloitte India report, the banking industry is the most targeted segment, with the sector faced nearly 22% of cybersecurity attacks in India in 2018-19. The banking industry has been fast to acclimate to the changing demands by accelerating efforts toward contactless business operations and speeding up the digital transition to enable employees to work from home post the lockdown.
As a result of the technological incorporation, the banking sector has been facing numerous challenges about safeguarding data security. The report added that the year 2020 has been quite demanding for the banking sector in India in terms of cybersecurity.
After the beginning of the COVID-19 catastrophe, banking operations were interrupted relentlessly as banks battled to deliver continual services to their clients during various phases of lockdowns.
However, in the following months, the banking industry accelerated its digital transition efforts (such as digital banking and remote access to employees) to ensure contactless business operations. “With a surge in digitization, banks also witnessed a spike in cyber attacks as cybercriminals found new opportunities and vulnerabilities,” the report added.
Talking about the cybersecurity breaches, the threat is not limited to the banking industry alone but also to startups and SMEs in India. These industries have also become very vulnerable to cybercrimes. According to a CyberPeace Foundation report (CPF), startups and SMEs in India are the most vulnerable segment when it comes to cyberattacks.
National Cyber Security Coordinator Lt Gen (retd) Rajesh Pant said that every day, 4 lakh malware is found, and 375 cyber-attacks are witnessed in India. WhiteHat Jr, Big Basket, and Dunzo are some of the startups that saw their data getting compromised over the last few months.
Interestingly, the Reserve Bank of India (RBI) in its financial stability report (FSR) in July 2020 highlighted that the banking industry remains a target choice for cyber-attacks especially post the Covid-19 pandemic caused lockdown there has been an increased incidence of cyber-threats.
While there have been concerns around cyber-security in the context of banking operations involving critical payment systems infrastructure. RBI said several milestones have been accomplished right from centralization of regulatory and supervisory functions related to cyber-security aspects for all supervised entities with the CSITE (Cyber Security and IT Risk) Group of the Department of Supervision to mandating baseline requirements for critical service providers.
Commenting on the growing cybersecurity crime, Paytm founder Vijay Shekhar Sharma said data protection has become the most important thing for companies.
“With the changing technology, cybercrime is growing and every data is stored either on clouds or in any operating system. This gives an advantage to hackers to disrupt the services and all the confidential data gets hacked. This is a serious problem and can prove detrimental for the whole economy. It is of utmost importance for firms to revamp their security policy and bring a data protection mechanism.”
Echoing a similar sentiment, Shaila Mir, who looks after the digital technologies at Jammu & Kashmir Bank, said cybercrime is a reality in today’s fast-changing world. It is not only the banking sector or fintech firms, the threat is mounting across industries. “The technological innovation has certainly made things very easy but it has its drawbacks. Personal data, confidential reports, among others are at risk. Companies and governments should constitute a governing body that would discard any cyber threat.
In the meantime, several startups are working in order to combat cybercrime. For instance, Jaipur-based cybersecurity startup WiJungle aids companies do away with numerous products like routers, load balancers, VPN servers, firewalls, among others, and deploy only one to secure all networks.
Karmesh Gupta, CEO and co-founder at Wijungle told the media, “Within the last two years, Wijungle, as an individual player, has grown from a single nation to 27 nations. Our yearly growth rate has been 500 percent. Being an initiative under ‘Make in India,’ WiJungle, a prominent player in Unified Network Security space, has emerged as the government’s new face of cybersecurity.”
Given this, India’s startup ecosystem has to reevaluate and set up a vigorous cybersecurity structure, as the number of users has soared with the push towards digital adaptation. “Successful ongoing cyber resilience should require the strategic alignment of cyber strategies with incident response, business continuity, and disaster recovery planning. We've got to involve the entire enterprise — from the front office to back,” said Akhilesh Tuteja, Global Cyber Security, Co-Leader KPMG International, in a recent report by KPMG on how businesses should prepare for the growing number of cyberattacks.
Trends in the banking Industry
The coronavirus outbreak has crippled the economy across the world and impacted many industries with the banking sector being one of them. Banking is an integral part of the economy and any disruption in this can prove detrimental for the overall economic progress.
The emergence of fintech firms, mobile banking and internet banking are some of the examples that mark this shift.
Here are the latest trends that are transforming the banking industry in India:
Digitization: As technology has been evolving at a much faster rate, digital offerings became an essential part of banking operations. The banking industry needed to keep up with technological innovations and offer better customer services. The major shift came during the 1990s when liberalization opened the global window for the Indian market. Several private and international banks forayed into the Indian market and enhanced technological changes in the banking industry. Services such as telebanking, IMPS (Immediate PaymentService), online banking and RTGS (Real Time GrossSettlement) aided customers to use banking services from anywhere.
Mobile Banking: Earlier, a decade ago, customers used to conduct a financial transaction through desktop or computers which required them to be at home or a cyber cafe. However, with the inception of mobile banking, the need for a desktop is no more important. This service launched by the banks in form of an app allows their customers to make any financial transactions remotely through smartphones or tablets. Mobile banking is usually accessible around the clock 24/7. Also, cheap internet data fees have contributed to an increase in the use of mobile banking.
Unified PaymentInterface (UPI): This service emerged a couple of years back and is transforming the way customers receive and pay cash. Established by the NationalPayments Corporation of India (NPCI), it is a smartphone application that enables customers to transfer cash within seconds between bank accounts. GogglePay and BHIM (backed by the government of India) are two major services that facilitate easy payment even when a customer does not have physical cash.
Digital-only Banks: This service offers banking services only through digital channels which are easy to access using tablets, smartphones and laptops.his seems to have overtaken the traditional ways of banking as it operates in a paperless and branchless model and provides high-speed banking service at a low transaction cost. For today’s fast-paced life, these virtual banks are an ideal option.
Artificial Intelligence(AI): With the growing technology, many private and public banks have started using chatbots or artificial intelligence robots for serving their customers. Though the practice is still at the nascent stage, however, it will evolve with time and will be used widely by banks as well as customers. Chatbots are one of the emerging trends and are considered to grow at a much faster rate in the coming years.
Blockchain: This is seen as a robust technology that can evade any security threat in the digital banking sector. Despite several technological advancements, scams and fraud practices still pose a challenge for the banks. With blockchain, these threats can be taken care of and there would no scope for any misuse of technology in the banking services. Blockchain technology, which works on data science, cryptography and computer science, is still in the development phase.
Biometrics: This has become an exceptionally useful trend from the security point of view. The biometric authentication system is transforming the country's national identity procedures and the impact is anticipated to be pervasive. For the banking industry, biometrics features such as the combination of encryption technology and OTPs are ensuring the highest layer of security against any leaks or hacking. Many banks are using this feature to ensure the safety and security of their customers, accounts and bank assets.
Rise of Fintech Companies: Initially, the banking industry considered fintech or financial-technology firms a disruptive push in the sector. However, with the changing landscapes in the Indian banking and financial industry, fintech firms have emerged to be an important part of the sector. These fintech companies aim to outstrip the traditional methods of finance using financial technology. With the inception of fintech firms and fintech apps, the framework of providing financial solutions to the customers has been changed. The fintech firms have enhanced the services, customer experience and reduced the price paid apart from providing easy access to financial services.