Banks have began asking non-bank partners to upgrade their information and facts technologies (IT) systems to minimise payment failures. The move follows a higher incidence of transaction failures in the latter half of 2020, and regulatory recommendations which spot the onus of guaranteeing payment safety controls on banks.
In 2020, huge on-boarding of new digital customers onto payment platforms was accompanied by outages in bank systems and resultant transaction failures. Matters had been difficult by the truth that a significant quantity of transactions, in particular these created by way of the Unified Payments Interface channel, involve various hops across entities. Instances of fraud and information breaches have also been reported with some entities.
Taking cognisance of a series of outages at HDFC Bank that rendered its consumers incapable of finishing transactions, the Reserve Bank of India (RBI) in December 2020 imposed organization restrictions on the bank. In February this year, the RBI issued a master path on digital payment controls which shall apply to scheduled industrial banks, compact finance banks, payment banks and credit card-issuing non-banking monetary businesses. As a outcome, it falls to the banks to make certain the results and safety of digital payment transactions.
Sameer Shetty, head, digital banking, Axis Bank, stated that most reported situations of information leakages have occurred with non-bank entities. Some outages, as well, have originated outdoors banks. The lender is now extending disaster recovery workouts and the complete discussion to its partners as nicely.
“There is a bunch of activities we are carrying out internally, such as framing policies on the kind of vendors we work with, what data we share, how we do information checks of their systems. We have now become very aggressive in terms of doing regular audits and checks of vendors so that their security systems are of similar levels,” he stated. The bank is also working to see how it can encrypt more and more information.
At the similar time, the whole ecosystem involved in digital payments will have to come with each other to smoothen the creases. Veena Sivaramakrishnan, companion, Shardul Amarchand Mangaldas & Co., stated provided that outsourcing is a regulated activity for banks, it is no surprise that banks are reaching out to their partners to upgrade and match the IT needs of the bank itself. “In addition to ensuring a smooth payment flow, this will ensure reduction in manual intervention and personnel error. These measures will ensure that the trust reposed in the banking system continues to stay strong,” she stated.