Technology is a levellor. And chartered accountants dont develop technology. They may not even be competent to deploy it. The future of any bank depends on technology. And Atanu, Chairman of HDFC was the key engineer around
If your money disappears from your bank account, then it doesn’t matter what your narrative is. The brand narrative collapses. Technology is not about writing standard operating procedure manuals. Or buying a ERP. It is hard enough to get a mobile app to be convenient and safe. When you look at the fintech companies, they are not buying ERPs. They do their technology themselves. Frugally. Smartly. They make mistakes and they learn.
Cybersecurity is another whole new ballgame. If the servers get compromised – the board gets compromised. NSE tried using accountants and MBAs to head the exchange. Sebi even got them to put a clause in the appointment letter stating that for each outage, 10% if their salary would be cut. Yet we had all kinds of challenges in NSE from hidden godmen running the company to colocation systems giving bad actors a time advantage.
Walk into the securities operation centre at any of the private banks. And they are like school kids playing in a lab. There are no high quality professionals. They are hoping for the best. Some are even praying real hard. The central bank has no capability either. How will our banks protect the valuable capital held with them in trust.
As a simple answer – they have no chance of safeguarding your money. In the Havala Bank money just disappeared from accounts. They sacked an employee or two, made good the reported losses and got back to business as usual.
HDFC has far more serious problems. Which are compounded by their scale. I once recall a conversation with the CBI standing counsel. At the year end, his accounts wouldn’t tally. The culprit was a feature called “auto sweep”. This means that whatever surplus funds are in your current or savings account are swept into a fixed deposit account. The problem was that funds would leave the account but not reach the FD. They would get parked in a suspense account. If the customer figured out, they would claim “computer error” an promptly correct it. If it went undiscovered, well …. Don’t know what happens to the money. This is just one example of IT as a profit centre.
Banking increasingly is about technology. And most private banks don’t have any technologists of any calibre. It is not if but when a cyberattack will happen. And then what ???
Insurance doesn’t help because there is no insurance for cyber attacks taken by the banks. When you take net banking, you indemnify the bank from any liability. This means that the account holder losing his money has to go to the police and wait maybe … 20 years. As regards the money .. it is unlikely it will come back.
Technology is the number one risk in retail banking. And large banks have no clue. The one senior engineer they had has quit and joined SBI.
