Sure, bank online, but beware muggers

As personal data gets harder to protect and online banking gets ever more bewildering, especially for older folk who find it difficult to keep up with shape-shifting websites and apps, Indians at large seem increasingly vulnerable to being ripped off. According to the annual report of our bank regulator, the Reserve Bank of India, cases of major frauds—involving sums of over ₹1 lakh—reported by banks added up to a total of ₹1.85 trillion in 2019-20 (year-ending June). This total is more than double the previous year’s figure, though it includes cases of earlier years that only happened to be reported last financial year. There may be no way to estimate the actual misdeeds within a given year, but it’s fair to assume that the problem is getting worse. Large-credit frauds made up the bulk, with public sector banks the worst hit.

Low-value fraud is a worry too, the kind that parts ordinary folk from their money. Online banking must take a large part of the blame for this. Banks use double-verification protocols for internet transactions. The system assumes that an individual who accesses a bank account online by supplying a password—or thumb impression—and also has a registered mobile phone linked to it, so as to key in the one-time code that’s sent, must be an authentic client. Hackers, however, can sneakily install spyware on phones to grab all the data they need for robbery. This is the equivalent of a mugging at gunpoint. It’s very rare, but it happens. Dummy bank websites serve a similar purpose.

With people’s account details--the numbers, IFSC codes, etc--now all over the internet, thanks to e-commerce, there are easier ways for thieves to operate. Ever since banking went largely faceless, customers have found it difficult to get even a voice at the bank’s end to speak with. So, when nameless callers pretend to be calling from banks, too many recipients of such calls—especially those who’re befuddled by apps—are grateful rather than suspicious. Those who get vital information coaxed out of them, alas, end up suffering. While going online must surely have saved banks some money, it may be time for them to ponder the consequences of their receding brick-and-mortar presence.