Former RBI deputy governor R Gandhi Tuesday said following the Supreme Court order in the Aadhaar case, there is great uncertainty, confusion and reluctance on the part of banks and financial institutions to use biometrics as the basis for identifying individuals. “Several Fintech companies have to redraft their business models because of this,” he said. According to him, the cost of operations of those Fintech companies have tremendously increased consequently, affecting their profitability and also threatening their continued existence.
The banking and financial sector is experiencing cyber risks more because of the increased use of rapidly evolving, sophisticated, and complex technologies, wide use of third-party vendors and increased use of mobile technologies by customers, among others, Gandhi said. He was speaking during the Fifth IEEE International Conference on Identity, Security and Behaviour Analysis (ISBA 2019) at the Institute for Development and Research in Banking Technology (IDRBT), here.
Banks and financial institutions, which have outsourced processing of their data, are now a worried lot because of the proposed ban on cross-border transfer of sensitive data which is proposed to include even passwords and financial data, he said. Gandhi urged researchers to pay special focus on burning issues such as data security and find viable solutions that would be within the legal compliance framework. On the cyber risks, he said it is widely believed that future wars between nations will be based on cyber-attacks and in cyberspace.
As a result, protection of critical systems of an economy like the defence, power, transport, energy and financial systems has assumed urgent and significant attention, he added. The apex court has declared the Aadhaar scheme constitutionally valid, striking down some of its provisions, including its linking with bank accounts, mobile phones and school admissions.