Robust regulatory frameworks are needed to protect customers from misuse and fraud resulting from rapid digitalisation in financial services and proliferation of fintech platforms, Reserve Bank of India (RBI) deputy governor Swaminathan J said while speaking at an event in Paris.Addressing the Global Money Week 2024 earlier this week, the deputy governor said the COVID-19 pandemic accelerated digitalisation in financial services, prompting a swift transition to online mode by service providers and customers, according to an RBI statement.

Also Read: Should Senior Citizens Invest In RBI Floating Rate Bonds?

Accompanying this surge in digitalisation was also the proliferation of fintech platforms, he said.

Often operating outside the regulatory envelope and unconstrained by legacy systems that typically encumber traditional banks, fintech companies’ exhibit remarkable agility and adaptability in offering customised financial products, Swaminathan added.

“These developments are indeed welcome. However, while they offer immense benefits such as accessibility and hyper-personalization, they also heighten the risk of misuse and fraud. They can expose consumers to risk of cyberattacks, data breaches, and often times, some financial harm,” he said.

The senior RBI official emphasised that consumers may struggle to resolve disputes or obtain compensation due to lack of transparency on the part of such players. “These new risks must be addressed through robust regulatory frameworks, enhanced cybersecurity measures, and increased consumer awareness initiatives,” he said.

Also Read: 6 Ways Senior Citizens Can Protect Themselves Against Online Fraud

The deputy governor also shared some of the approaches adopted in India through regulation, supervision and enhanced consumer awareness. He elaborated on Indian regulations and supervision, including the requirement of multi-factor authentication for most of payments through electronic modes and fund transfers, guidelines on digital lending, and national cybercrime reporting portal.

“Despite all these measures, instances of unauthorised transactions due to compromised credentials from phishing attacks or customer negligence are not uncommon,” Swaminathan said. The RBI, therefore, makes concerted efforts to foster a culture of financial prudence and resilience through customer awareness and education campaigns, he said in his speech on topic ‘Safe banking practices – protecting the young’.

“As we focus on safeguarding the young, let us not forget the vulnerability of our senior citizens to financial frauds and cybercrime. It is incumbent upon us to extend our efforts to ensure their financial security and well-being as well,” the RBI official said. He stressed that it is imperative to remain vigilant and proactive in addressing the emerging risks and challenges.

Also Read: Breaking The ‘Age-Cage’: How Senior Living Homes Promoting All-Round Care And Comfort