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Who is going to take the tab for addressing cyber frauds?

Rise in digital channels and its usage has led to increase in incidence of cyber frauds. It has hit financial institutions and individual customers alike. Challenge is that the banking ecosystem is becoming increasingly complex with multiple stakeholders and handshakes happening. Banks now have ATM vendors, payment service providers, outsourced call centres, several other stakeholders managing and owning various parts of the process.

Each of them forms part of the chain and is susceptible to frauds. Ensuring proper security within each stakeholder ecosystem and also at each handshake point becomes very critical. Herein lies the trouble aswell!

This requires investments to be made but are each of these players strong enough to support such investments under inmense cost pressure they operate in? Who suffers the most when such fraud happens? Surely the customer…maybe the bank aswell. Who owns the customer? Again the banks…So it’s in banks interest but how can it ensure that all weakpoints are eliminated within the ecosystem? It is not going to be an easy task. Fortunately the other players stands to loose credibility and hence market value if they are identified as source of vulnerability. But is that identification clear? Not so, if you are following the recent fraud reported by a leading Indian bank. Initial reports points to a leading ATM service provider to have been first point of attack but that has been vehemently denied by the later. A forensic study is in progress to detail out the same and thats going to take sometime. Chances are that report wont reach public eyes.  Only way out is a more concerted effort in looking at frauds as a banking ecosystem problem and creating a right governance structure to address the same. That would mean a lot of coordination and clarity in each ones role in the same. That wont be easy!

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