HDFC Bank's Internet Banking customers have faced issues multiple times over the past year
HDFC Bank’s digital woes somehow seem to continue, even after the Reserve Bank of India (RBI) gave a hard rap on the knuckles last December following a series of digital outages, barring it from new digital launches till it resolves the technology issues. The December action from the RBI was supposed to be a strong warning for the new management under Shashidhar Jagdishan to get the technology capabilities ready and avoid further slips.
On March 30, HDFC Bank again reported a problem. It said some of its customers are facing intermittent issues in accessing its digital banking channels. Later in the day, an HDFC Bank spokesperson said the bank has resolved the snag. “The issue faced by some of our customers in accessing net banking/mobile banking stands resolved. We apologise for the inconvenience caused and thank you for your patience,” the spokesperson said.
But the recurring technology issues raise a question.
This isn’t the first time HDFC Bank is facing technical snags. And, to be fair, it isn’t just HDFC Bank but many banks have faced such problems. The country’s largest lender, State Bank of India (SBI), has reported problems on the digital channel, YONO. There are other lenders too which have reported technology issues on digital banking channels.
What’s troubling the bank technology front? Is it high volumes of transactions or yet another glitch in its data centre? There is no clarity yet on this issue.
More checks needed
“More checks and balances need to be built into the system before it is offered to the public. More extensive UAT (user acceptance trial) is needed so that the system remains bug-free,” Naresh Malhotra, senior banking consultant, stated.
“Some of the banks are in too much of a hurry to put newer products and utilities into the system. Sometimes, glitches like the ones that happened in quite a few banks over the period of last one year do take place.”
Banks often call technical glitches a routine problem. But, Malhotra doesn’t buy this argument. “If it is a routine technical problem, then it shouldn’t happen at all because the routines are quite well known,” he said.
“Banks have to ramp up their technology capabilities to deal with the high volume of digital transactions and a lot of additional features. They need to make sure slips do not happen. As we have seen in some of these cases, banks have not been very proactive,” said Ashvin Parekh of Ashvin Parekh Advisory.
“These systems were built for a fewer number of customers in the past. But that scenario has changed in the last few years and COVID has accelerated the volumes. And also, it is expected that the regulator is fairly proactive,” Parekh added.
On December 3, HDFC Bank said the RBI asked it to temporarily stop all launches under its Digital 2.0 initiative and stop sourcing new credit card customers. The announcement came after the bank experienced multiple outages in its internet banking, mobile banking and payment utility services over the past two years.
Later, the bank said it has submitted a detailed plan to resolve the technical glitches, Moneycontrol reported on January 19. The short-term plan is aimed at fixing the technical issues that led to recent multiple outages on HDFC Bank’s digital banking channels, the report said.
It couldn’t be immediately ascertained whether the RBI has reverted to the bank following this plan. In a letter to customers, HDFC Bank’s CEO Sashidhar Jagdishan, in December, said the bank will comply with the RBI regulations and will wait for the regulator’s clearance before launching new products. HDFC Bank’s digital outages are credit negative, global rating agency Moody’s said on December 7.
“Banks like HDFC Bank has had uninterrupted growth in the past. They were early adopters of digital technology platforms. However, investment in front office and digital channels are not balanced by investment in mid office and back office,” said Jaya Vaidhyanathan, CEO, BCT Digital.
Aggressive digital push
Banks are now turning aggressive on digital banking channels to reduce the dependency on traditional brick-and-mortar models and catch the younger generation who are more tech-savvy. As against traditional banking, digital transactions are more convenient and most of these can be done round the clock.
Following the multiple reports of digital outage, the RBI had looked at the matter and sought details from the bank. Recently, RBI Governor Shaktikanta Das said that banks must invest more in building robust IT platforms to fortify public confidence in digital banking.
Digital transactions are gaining momentum. Recently, the RBI had made the Real Time Gross Settlement System (RTGS) available round the clock on all days from 12.30 am on December 14. With this, India became one of the few countries in the world to operate its RTGS system round the clock throughout the year.
This came within a year of operationalising NEFT 24x7 by the RBI, the central bank said. Transactions worth a minimum of Rs 2 lakh or more can be done via RTGS with no maximum ceiling as per RBI.
“Digital channels and growth in the number of customers have been given a lot more importance by banks than investments in fundamental software and technology capabilities. The more you keep adding weight on the top on a weak foundation, it will collapse eventually. It is not collapsed yet, but it will at some stage,” Vaidhyanathan observed.