Security Vs Flexibility

Security is inversely proportional to flexibility or ease of use, a banker confided in me recently. It’s a telling statement. This one pithy assertion lays bare the philosophy behind life today, with or without technology. Let me explain. As technology takes over large tracts of our life, it is inevitable that it will also affect our financial planning and our daily interface with payments systems. But, then, nagging questions pop up: are we ready to embrace change? Are we adaptable to the demands of new transaction methods and protocols?

These concerns arise because there is marked increase in fraud incidents, especially in areas of banking which use information technology heavily. Combined with our inability to understand the plumbing, the unknown easily morphs into the unwanted and the unpleasant. The default mode is to blame technology for everything. Unfortunately, banking and frauds are joined at the hip. Large sums of money siphoned off as fraudulent loans, or withdrawals from savings accounts via spurious identities, were happening even when clunky, manual ledger posting machines were in use.

As customers, we are responsible for keeping our accounts safe. Then why are we so lax with the security of our bank accounts or our credit cards? It has been observed in many cases of ATM frauds that it is actually a misuse of the card and the culprit actually is somebody close to the cust­omer, inc­luding offsprings. Re­­­m­­ember this: for any ATM transaction to go through successfully, both the valid card and pin number have to be used. The lesson here is: customers must be aware whether somebody is observing their ATM transactions, or whether their ATM card and its pin number are easily accessible to somebody with deft fingers. Some of these measures are applicable for even net banking. If you provide your bank account details to mails from strangers, which claim you’ve won $10 million or some such, then you are asking for trouble.

This is where the wry, laconic axiom quoted above kicks in. As security is cranked up around your bank account, the less flexible it becomes. Many banks do not let any transaction pass through without confirming the auth­enticity of the customer through a two-step verification process. After logging in, you may need to provide a transaction password or the bank sends a one-time password to the customer’s registered mobile number which has to be keyed in before the transaction can be completed. But, infrastructure can play spoilsport: with mobile networks unable to reach all corners, one-time passwords may not reach customers on time.

But, most importantly, there is a dire need for continuing customer educ­ation. One sporadic ad in the newspaper, one occasional jingle on the radio might not be enough. And, this needs the involvement of everybody—from the Reserve Bank to switch providers (such as, Visa and Mastercard), from banks to ATM vendors.

The author is a policy analyst and former executive editor, The Economic Times; E-mail your columnist: rajrishi.singhal AT gmail.com