The rising risks and challenges in the space of cybersecurity and tech-focused banking has taken a toll on Indian banks. In the past few months, some of the top lenders have seen issues pertaining on their digital banking and cybersecurity front. On this, Boston Consulting Group India's managing director and senior partner, Ashish Garg, said that these banks may need more technocrats in their system. Also, there is a need for a more detailed understanding of technology among the top executives of these banks.
“Risks are evolving and will continuously evolve in cyberspace. Banks can build more partnerships for their risk management but they also need to do something more internally. I would also suggest the leadership of the banks must continuously expose themselves to what is happening around the world. There is basic training and everything inside a bank but there is a need for a more specialised approach here,” Garg told Moneycontrol.
Garg highlighted that banks in line with their partnerships with fintechs and other entities can look at broader and modern solutions to the risks.
“Everyone is aware that they have to do something on cybersecurity. I feel a lot of fintechs will start bringing solutions on cybersecurity. So I think some of that will keep evolving and be happening in the market,” Garg added.
To invest more in tech
In August 2024, a BCG report pointed out that India’s financial institutions including banks were using less of their revenue on information technology (IT) than they optimally should. “Historically, Indian financial institutions have allocated a lower percentage of their revenue to IT spending compared to global peers. Global banks typically invest 7 percent - 9 percent of their revenue on IT costs while Indian banks allocate only up to 5 percent,” the report said.
But recently, Indian banks have planned to increase their technology spending to around 10 percent of their operating expense. This comes after a Reserve Bank of India scrutiny threw up the fact that they were not spending enough to keep up with the surge in digital transactions. Banks were earlier spending between 6 percent and 8 percent of total operating expenditure on technology, sharply below the global average of 10-12 percent.
Here, Garg highlighted that banks have been investing in their technology and other services but there is a need to always look at more. “I am saying that investments need to be there. There was a thought process that had to be always there. Technology alongside risks and everything is evolving and banks are taking notes. But keep on doing more,” Garg said.
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