Securing The System

Banks need to do a lot of work to secure their systems and customer data.

- B.S. Srinivasalu Reddy

IT HAS DAWNED ON BANKS that they need to tap the innovative capabilities of financial technology (fintech) start-ups to stay competitive. They are opening up their systems, or core banking platforms, for plug-ins with fintech players. The banks claim it's helping them expand the financial services network and incubating new set of capabilities for lenders. Still, the marriage of convenience comes with its set of challenges. Increasingly, data security concerns and privacy issues are coming to the fore. A lax regulatory environment for third party system developers, particularly fintechs, is accentuating the concerns. The Reserve Bank of India, the banking regulator, is also worried.

“This is again a potential area where we have an opportunity to engage with fintechs that focus on machine learning, pattern matching, fraud detection and creating a more intelligent framework to detect anomalies and prevent any potential misuse,” says Ritesh Pai, Chief Digital Officer at YES Bank. YES Fintech, YES Bank’s business accelerator programme for fintech start-ups, is also experimenting with biometric solutions to prevent frauds while creating a seamless KYC and customer on-boarding, and adopting digital signature and AI technology for identification, background checks and forgery detection.