Notwithstanding the recent headwinds from Covid-19, India’s largely consistent economic growth for more than a decade has precipitated an unprecedented expansion of financial services in the country. With rising disposable incomes, more and more Indians are accessing banking, insurance and mutual funds, among others.

The advent and penetration of the internet has further simplified these daily financial tasks. However, in an era of inter-connected world of devices with cyber technology at its core, lack of awareness as well as the prevalence of ill-designed or inadequate security systems is always a challenge.

With 160 crore bank account holders, 32.8 crore life insurance and 47.2 crore health insurance policyholders, 2.78 crore registered investors with stock exchanges and 9.26 crore mutual fund accounts, India has a mammoth financial sector.

The sheer scale generating gigantic volumes of data on a continuous basis renders the sector vulnerable to frauds. As such, a large scale cyber security enlightenment drive is the need of the hour.

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Recent data breaches illustrate the risks

Although banks are considered as one of the world's most secure and sophisticated enterprises, banks are becoming a popular target for new-age hackers. Only last year, the RBI had to direct the banks to secure their customer data after reports of 1.3 million credit and debit card data of Indians found to be on sale on the dark net came out.

In another instance back in 2016, 32 lakh debit cards had to be recalled by several banks including State-run SBI on account of data breach. According to the latest RBI report, card and internet frauds, more than doubled to Rs 195 crore in 2019-20 from the previous year. Then last year, Aegon had to investigate a data breach involving 10,000 customers. Then this year, Religare is reported to have faced data leakage of 5 million customers and employees.

The modus operandi of a hacker

In recent times, unscrupulous hackers have evolved ingenious ways using unique and complex arrays of cyber-attacks to get past the ordinary security systems. The hackers are attempting to get hold of sensitive financial information of individuals, either from banking servers or an individual’s personal devices.

Infiltration of smartphonesOne of the ways of extracting a person’s financial information is by infiltrating his smartphone with malicious applications. When a user wishes to use an app requiring access credentials, a data-theft overlay mimicking the desired app user interface gets displayed tricking the user to think that he is clicking on the genuine app.

The unsuspecting user goes on to record the details of his access credentials which now get transferred to the hacker who now also has the app under his control.

Deploying banking Trojans

Going a step further, hackers also embed these fake applications with banking Trojans, such as bank bots’ cabarets pink slips intending to attack banks and stock brokerage firms with an eye on making hacking operations easier. These malware lock users using an Active Directory attack further bolting it up with many login attempts. These bots and Trojans are focused on stealing money from the bank accounts.

PhishingPhishing is another type of attack which involves the hacker sending an email to the victim claiming to be a trusted sender (like a bank or online shop), or by way of setting up fake websites claiming to be genuine.

A banking Trojan is attached to this email. Once the victim downloads it and opens it, the Trojan activates and steals information.

Retargeting real information from dark web using fake pages

Another method entails hackers first buying real account information in bulk quantities from the dark web and then retargeting those accounts using phishing emails. In such a phishing email, disguised hackers request victim to follow some simple procedures on a web page, which has been deliberately set up by hackers for stealing login information and other important credentials.

Macro malware

Hackers also employ what is known as macro malware which is developed using programs like VB Script programming language used for MS-Word and MS-Excel. Legitimate-looking files are usually sent via phishing email which comprises of malware-infected attachments such as CV by job seekers and cover letter reports in the form of MS Word files.

Even as several advanced antivirus programs claim to detect macro viruses, hackers are trying to stay ahead of the game. Now, malware can comfortably hide within a system for a long time that gives hackers ample time to infect the system of users.

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What is the way out?

First, financial institutions must identify micro malware during the initial phase itself with a view to pre-emptively block it. And for individuals, to protect your information and make India’s financial sector secure, some tips are as follows: never open or download any attachments on your device without knowing the context, Invest in a genuine and licensed antivirus software on all your devices, never click suspicious links within an email that claims to contain genuine intimation and abstain from sharing your personal details on social media.

Therefore, in order to mitigate financial risks and to rule out any breach, concerted steps are needed at both macro and micro levels. Banks and financial institutions must invest strategically towards improving cyber security with a view to protect customers as well secure the larger financial architecture of the country. More importantly, ordinary users need to be made aware of these risks.

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)

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Original Source: yourstory.com

Launched in 2012, YourStory's Book Review section features over 250 titles on creativity, innovation, entrepreneurship, and digital transformation. See also our related columns The Turning Point, Techie Tuesdays, and Storybites.

Transformations in the worlds of money and technology are converging, as described in the book by Sanjay Phadke, Fintech Future: The Digital DNA of Finance.

The material is spread across 17 chapters, and makes for an informative read for beginners new to this field. However, the choice of font could do with considerable improvement, and there are several typos; more figures would have been a welcome addition to improve readability as well.

Sanjay Phadke is the Head of Global Platforms and Alliances at Vayana Network. He describes himself as a “tinkerer (almost) and teacher (hopefully)”. He graduated from Jamnalal Bajaj Institute of Management Studies and Sardar Patel College Of Engineering.

Here are my takeaways from the 190-page book, summarised as well in Table 1. See also my reviews of the related books Prediction Machines; Seeing Digital; A Human's Guide to Machine Intelligence; Machine, Platform, Crowd; and The AI Advantage.

T

Table 1: Fintech transformations (image credit: YourStory)

Evolution of money

The invention of language and money are key contributions to the evolution of society, Sanjay begins. Money acts as a bridge from past to present and future. It is a form of payment and trust, and even a way to acquire more money through financial investment.

Money is a means of exchange and way of comparing the worth of different assets and services. It has deterministic, probabilistic, and even emotional connotations. Evolving from shells to coins and banknotes, currency and its governance are being transformed in the digital era.

While coins did not need numbering, banknotes do. Banknotes today account for only five percent of monies globally, Sanjay explains; the rest is stored in digital or ‘dematerialised’ form.

“Digital money is data,” the author observes, it is a string of characters, and does not derive trust from its physical form any more. New risks arise, of course. “No digital property can be guaranteed to be foolproof from digital theft,” he cautions.

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Key players

Banks, big tech giants, and fintech startups are the three categories of players in today’s financial scenario, Sanjay explains. The industry is tightly regulated, so governments and exchanges play a key role as well.

There are significant differences in the mindset and operations of banks and tech-led firms. Tech DNA is about rapid change, agile development, and learning quickly from mistakes to develop easy-to-use offerings. Bank DNA is about being cautious, paranoid, careful in experimentation, and slow change.

One chapter traces the evolution of the “finscape” in the US, China, and India. The US already had a mature system in place in the pre-digital era, with social security numbers, credit cards, and credit bureaus. “China and India, in contrast, had vastly underdeveloped ecosystems,” Sanjay observes.

The US tech players have now set high expectations for engagement among the younger generation of mobile-connected always-on users around the world. “Silicon Valley is coming,” in the words of Jamie Dimon, CEO of JP Morgan.

The market value of US tech giants like Apple and Amazon is around half of India’s GDP, and they are entering the world of finance along with Google and Facebook as well, Sanjay explains.

Fintech 1.0

Mobile payments and digital-only banks are some forms of Fintech 1.0, Sanjay explains. Alibaba’s Ant Financial set up MyBank as a digital-only bank to offer loans to small businesses in just minutes. It draws on transactional and social media data, fed into AI scoring models.

Neo-banks do not have a banking license but partner with banks to offer banking services. Some existing banks have also rolled out their own digital-only banks, such as Fidor by JPMorgan Chase and Kotak’s 811.

Payment via QR codes has accelerated mobile payments even more. IoT and the emergence of 5G will speed up the momentum further. IoT sensors in vehicles are being used by automobile insurance firms; voice-based assistants and face-recognition technologies are other trends to watch in fintech.

Paypal was one of the first “native-Internet” fintechs. Microsoft is more likely to be a collaborator with banks than a competitor. Softbank is another player to watch, thanks to its investments in fintech startups, the author writes. Fintechs in other countries include Adyen (Netherlands) and Klarna (Sweden).

China has a highly-innovative landscape at scale, as seen in Alibaba’s Alipay, Yue Bao (money-market fund), and Sesame Credit (social credit rating). Ant Financial is the first of the “super fintechs," according to Sanjay. (See also my reviews of the related books Tech Titans of China, China's Mobile Economy, and AliBaba.)

There are new active players in wealth management, consumer loans and insurance. Alibaba also expanded into finance for logistics services, a move copied by other players around the world. Thanks to not having legacy baggage, China has created a “futuristic fintech ecosystem,” Sanjay explains. However, it is siloed into the BAT trio worlds.

India has emerged as a laboratory for global big-tech players, along with local firms like HDFC Bank and Bajaj Finance. Among startups, the book focuses largely on Paytm and not the broader spectrum of players. Paytm’s fortunes were boosted by events like demonetisation, and also received India’s first investment by Warren Buffet.

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Fintech 2.0

The world is awash with money, yet few get loans, the author laments. Cautious banks need collaterals, guarantors, or credit history data based on past records. Unfortunately, the aspirational needs of low-income or poor people cannot be fulfilled in such a system, even though India has 120,000 bank branches – the highest number in the world.

“The poor pay the highest for a loan and gets next to nothing on deposits,” Sanjay observes. Even remittances of foreign labourers are charged relatively high service fees.

Frauds and false identities have plagued the banking system. Digital transformation can help in this regard, but there are also risks regarding theft of data, money and reputation, the author cautions.

India’s larger fintech moves have been cautious and led largely by the government, as seen by inter-connected developments in the B2C and B2B sectors like biometric UID, UPI (Unified Payment Interface), and GST. The author identifies other developments as well, such as DEPA (Data Empowerment and Protection Architecture), PCR (Public Credit Registry), and AA (Account Aggregator).

Aadhaar helped Jio acquire a million customers a day, and reduced activation times. Jio is forging alliances with a range of tech giants, Sanjay observes. Digital technology and finance innovations helped spur the Chinese economy and created a vast pool of SMEs; it is hoped that a similar boom can take place in India as well.

The API architecture is spurring a range of innovations on top of existing digital infrastructure, driven by the talent of entrepreneurs. Hopefully, these combined developments can make access to capital easier and more automated, given the rapid growth of data communications in India.

The success of emerging economies like India depends on democratising access to capital as raw material for the needy, the author emphasises.

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Fintech 3.0

The author charts a range of technologies in the next wave of fintech, clustered as the new ABC: AI, algorithms, autonomous operation; big data, blockchain, bitcoin; and cloud, crypto, cybersecurity. Other trends to watch are quantum computing, which can also pose risks to security via the ability to crack codes.

Continuous feeds of data and powerful algorithms can improve automation and robustness of financial processes at scale. For example, they can improve assessment of ability and willingness to pay by better understanding social psychology (though overcoming bias will be a challenge). Spotting anomalies and outliers can improve fraud detection defences.

Bitcoin regulations vary around the world, but some blockchain features are being implemented. Hybrid systems may emerge in such a context, the author observes.

Platformisation combined with AI is a powerful combination. But countries have adopted varying positions on cloud infrastructure and data sovereignty as well (eg. EU’s GDPR), and trade wars have triggered off new moves in geopolitics.

If all goes well, however, the dream of making financial security and prosperity for all can become a reality when arteries of finance become unclogged, the author sums up. Innovation, agility and scale can be enhanced through financial ecosystem partnerships and progressive regulation.

Edited by Kanishk Singh

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Original Source: yourstory.com

The fintech industry in India is growing rapidly. They have captured a good space with advanced technologies like smart usage of Data Science, Artificial Intelligence and Machine Learning. Even large banks and financial institutions have now started to value the importance of fintech.

The rapid growth of India’s fintech space can be attributed to the success of mobile payments and digital lending. Hence, it is not very surprising that traditional banks are also keen on embracing new technologies and partnering with fintech players to improve their service standards.

Many large banks have even set up fintech subsidiaries to internalise fintech competitiveness and export technology capacity to smaller banks. Fintechs are also stepping in to help financial institutions handle the large number of loan applications by enabling digital applications, facilitating data collection or assisting with the underwriting and approval process.

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How fintechs are helping keep consumer liquidity flowing?Mobile payments

Fintech has significantly pervaded the mobile payments landscape. Many fintech players are taking advantage of the rise in the use of smartphones, improvements in digital infrastructure, and a growing interest in online shopping.

The advent of UPI has further eased the process of making payments online. The biggest advantage offered by UPI is its interoperability among multiple banking platforms. This enables customers to enjoy a fast, seamless and reliable payment experience, and pay utility bills. In addition to this, they can send money to their family and friends almost instantaneously.

Digital lending

The process of availing loans from traditional banks is not only time-consuming but also paper heavy. It sometimes takes weeks to just get approvals for the loan. The COVID crisis has further worsened the situation as most of the banks are reluctant to lend in this uncertain scenario. Against this background, digital lending NBFCs have emerged as a saviour for customers.

Fintech companies operating in the digital lending space uses new-age approaches to disburse credit. Instead of relying on traditional financial data, they are now using alternative data to make more accurate and informed credit decisions.

Alternative data for credit scoring can cover employment history, academic background, rental payments, utility bill payments, insurance payments and even social media activities.

Since there is a shortage of credit data on MSME borrowers, fintech lenders leverage alternative data to assess their creditworthiness. This method improves access to credit for MSMEs, who are often declined credit from the formal banking sector.

Not just MSMEs but alternative data also helps salaried professionals and freshers who do not have any credit score. This explains why despite being a fraction of the banking system in size, the digital lending space is growing at a rapid pace owing to the faster and hassle-free process of loan disbursal.

Another main advantage of digital lending is that it allows for digital customer onboarding and credit disbursements, thereby eliminating the need for the customer to be physically present at the lender.

The digital lending space apart from being hassle-free is also helping the new to credit customers and those who have lower income to avail short term personal loan with a few clicks. The fintech companies, through technological means, can promptly evaluate credit risks by using the database containing loan applicants’ background and approve the loan.

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Savings and ProtectionFintech firms are offering platforms to customers to enable them to save, manage their wealth, and make investments. They also help them to choose from a spectrum of financial products across categories such as insurance, savings account and mutual funds.

Some fintech companies are also providing customised financial advice on a range of financial products. Mutual funds, for example, can play a key role in addressing the credit needs of customers.

In March and April this year, around 1.2 million new investors opened demat accounts with the Central Depository Services (CDSL) despite the ongoing nationwide lockdown. This is an indication of more and more retail investors in the country taking to equities and MF route as against the more traditional forms of investments, viz., FD, gold, property, etc.

As many as 122 million Indians have lost their jobs due to the pandemic during the period between March and April, according to the Centre for Monitoring the Indian Economy. This means a large portion of the population do not have a steady income source and are suffering from a liquidity crunch. While traditional banks are not much of help in this situation, fintech NFBCs are providing a wide array of products and services to cater to their liquidity requirements.

Be it a personal loan or insurance, fintechs are using their strategic partnerships within the industry to financially empower their customers. The uptick in smartphone use and availability has also prompted many insurance providers to enable customers to complete applications and file claims from their smart phones.

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)

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Original Source: yourstory.com

In the past four months, organisations of all sizes and sectors have seen a tremendous shift in the business landscape, and have been adopting various remote working practices to ensure the continuity of their operations.

In this new dynamic, efficiency, speed, and cost-effectiveness are given top priority. Which is why organisations are implementing new technologies to work virtually, stay agile, automate workflows, and communicate and collaborate in real-time.

To gather perspective on the new dynamics that come with remote working and how technology is a key catalyst in this change, YourStory presented ‘The New Order of Work’ webinar powered by Lenovo on August 6, 2020. The panelists, which had a special focus on Small and Medium Businesses (SMBs), gave their insights on the adoption of collaborative tools, the importance of cybersecurity in the times of COVID-19 and much more.

The panel was moderated by Dipti Nair, Editor-at-Large, YourStory and consisted of industry leaders Ashish Sikka, Director – Channel and SMB, Lenovo India; Chung G Tham, Executive Director, GDS Assurance, EY; Udaya Bhaskar Vemulapati, CEO, Flujo; and Vivek Ramachandran, Founder, Pentester Academy.

The need to meet ever-evolving customer expectations

Ashish began the discussion by noting that it is important, more than ever, to be customer-centric given that customer expectations have changed since the onset of the pandemic.

”We must keep ever-evolving and tailor-make our solutions to meet customer and channel needs,” he said, citing an example.

Given the limited IT support in offices, Lenovo has been providing customers with devices that are pre-loaded with all the necessary tools to enable collaboration and productivity.

Lenovo has also been helping its channel partners and customers with cash flow challenges through financing provided by Lenovo Financial Services, its finance arm. It has also been providing one-year leases, renting, and buyback offers on its product for both its customers and channel partners.

Embracing the new order of work

Chung from EY said that the company has been working towards creating a flexible working environment since the past two years, and technology has been a key enabler. It has moved most of its tools to the cloud, and linked its systems with their clients to gather data. He also noted that there has been a significant rise in the adoption of digital tools, particularly in banking and insurance sectors where signing documents, meetings and other key functions are taking place virtually.

“In terms of a silver lining, it has turned the non-believers of outsourcing to believers, and also helped reduce the carbon footprint,” he said.The new challenges to security

Vivek from Pentester Academy said that the secrecy of conversations and that of data are two key challenges to security for organisations. He explained that the shift to collaboration tools also uncovered the uncertainty around the privacy of these conversations, “We are unable to extend that perimeter of trust of these tools to our homes,” he said.

Vivek also pointed out that since employees had been working from their home with their own devices, shoulder-surfing and exposure to malicious links had increased the threat of compromising data.

“Hackers are having a field day since the perimeter of the organisation has reached individual homes,” adding that they have been capitalising on the fear and uncertainty around the COVID-19 pandemic, as observed with the rise of spear-phishing emails centred around COVID-19 updates.A cultural change

Udaya from Flujo said that in their experience, the largest barrier to adoption of communication and collaboration tools like Flujo is not from a cost, but a cultural standpoint.

“Traditional SMBs find even communication to be a step up,” he said, adding that while top management and executive-level employees of SMBs are convinced in implementing tools like Flujo, it is middle management that often hesitates to adopt such tools.

Udaya also added that productivity from remote working also depended on an organisation’s culture, an individual’s culture, how self-driven each individual is, and the ability of a manager to properly measure and give feedback on the contribution of every individual. ”We need to find solutions that can fill gaps in these personnel, culture and HR-related issues before we can say a final goodbye to working out of offices,” he said.

Empowering SMBs with the right tools and devices

Ashish from Lenovo said that while SMBs must adopt technology to increase their productivity, they must also ensure that the devices they work on can be kept secure from data breaches and malicious attacks.

To that end, he mentioned that Lenovo’s devices are geared for this task. Its Thinkpad series come with camera shutter, port disablement features, hard disk and software encryption, and Lenovo ThinkShield, which secures the device with the help of third-party security providers, among others.

Best practices for enhancing remote working productivity

Chung mentioned that working with clients from countries that have strict data privacy laws like the US and those from the European Union meant that EY has always been keeping data privacy as a priority, particularly with personally identifiable information. It has been ensuring compliance with steps like double-factor authentication, end-to-end encryption, among other practices.

He also added that challenges such as system failures have been handled by using tools to access work systems remotely through home systems. On the people front, the company has been encouraging employees to be more physically active by exploring activities like chair yoga. “We are social beings, and so it is necessary for people to interact with each other,” he said, adding that to help employees cope with the mental stress from a lack of such interaction, the company has also set up hotlines for the same.

Vivek said that the main hurdle to securing operations is that security is always perceived as an overhead.

“The challenge has always been building security into the functionality of the product without having the user be aware of what he should do to secure the product,” he said, and he encourages his clients.to try to adopt tools and products where the security is seamless.

In cases where it is not possible, he suggests investing in educating employees about easy to implement best practices so that they should be reasonably secured while working from home.

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Original Source: yourstory.com

Data and artificial intelligence (AI) can add $450-500 billion to India's GDP by 2025, representing about 10 percent of the $5 trillion economy aspiration of the Indian government, a report by industry body Nasscom said on Tuesday.

Nearly 45 percent of this value is likely to be delivered by three sectors – consumer goods and retail ($90-95 billion), agriculture ($60-65 billion), and banking and insurance ($60-65 billion), the report said.

Artificial Intelligence

Image Source: Shutterstock

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The report, titled Unlocking Value from Data and AI, presented an action plan with five key building blocks to promote increased data utilisation and adoption of AI, including strategy, data, technology stack, talent and execution.

It emphasised that datasets of national importance be identified with each ministry with specific use cases, a programme to create a marketplace of data and derived assets be created, and a central agency be established for defining and enforcing data standards.

The report said platform(s) to securely host data, AI services, models, open-source libraries, applications and testbeds should be created and that policies be formulated to ensure the security, reliability, interoperability, and economic viability of the stack.

It also suggested the launch of the National Programme for AI and creation of a central, apex body to steer its execution, in collaboration with various ministries, industry groups, and other stakeholders.

The report highlighted the importance of building an AI innovation ecosystem and seeking greater participation from the private sector and entrepreneurs.

Engaging the AI ecosystem

It added that schemes to engage the AI ecosystem (industry, startups, civil society, and academia) should be created and guardrails be set up to protect public interest, while accelerating programme and economic impact.

Launching lighthouse projects in the public sector, partnerships to create data, tech and services, and grants or incentives to invest in research and innovation were also key suggestions of the report.

Unveiling the report, Electronics and IT Minister Ravi Shankar Prasad said Digital India had reimagined how the government connects with citizens, and the accelerated deployment of AI and other emerging technologies would help this objective further.

"…the kind of data we are generating because of the sheer size of India, we need to leverage it…data is a national asset and this asset, we have to leverage it…

"What COVID has done is enable the world to see India's potential…we need to further exploit it. AI for three areas of human development (education, agriculture and healthcare) is very important to be focused upon," the minister said.

Debjani Ghosh, President of Nasscom, said the report can help India emerge stronger from the COVID crisis.

"Data and AI's true potential emerges from its ability to drive transformation across multiple sectors through a diverse range of applications. The report articulates the key structural steps that India needs to take to realise the value of this opportunity," she added.

The action plan and report has been reviewed by industry leaders, including Tata Sons Chairman N Chandrasekaran, Wipro Chairman Rishad Premji, Infosys COO UB Pravin Rao, and Microsoft India President Anant Maheshwari.

Nasscom will also hold Xperience AI summit 2020 in partnership with the Telangana AI Mission from September 1-4 with curated discussions on four key themes – Build AI from and for India, Scale AI Adoption in India, India's AI Policies, Thought Leadership in AI.

Additionally, deep dive sessions will be organised for developers to understand latest trends in AI technologies and use cases.

(Edited by Teja Lele Desai)

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Original Source: yourstory.com