Page 29 - Banking Finance December 2016

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to contain incidents of frauds involving customers." RBI said prevent swindlers from gaining access to customers' card
in its latest report on Trend and Progress of banking in In- details. The move follows rising instances of phishing and
dia. Making the banking sector efficient via technological skimming attacks, through which fraudsters steal card in-
infusion while minimizing the occurrences of frauds, has formation and make purchases using those details.
become one of the major objectives of RBI in recent years.
American Express has introduced a new solution, 'ezeClick',
We can benefit immensely and take business to a new height for its customers in India to ensure their card data is not
by exploiting the huge potential of e-commerce. We can shared with merchants while making online transactions.
leverage e-commerce Currently, an individual has to share information such as card
I) To migrate customers to alternate channels, say, ATM, number, expiry date and card verification value during online
Internet Banking, Mobile Banking, etc. credit card transactions. It uses secure socket layer tech-

II) To provide convenience of anytime banking, anywhere nology to transmit and receive the card members' personal
banking to the customers information, which is then encrypted in such a way that it is
virtually impossible for anyone other than American Express
III) To use our staff members for marketing and business ezeClick to read it. The solution also makes e-commerce
development
transactions simple and swift.
IV) To reduce transaction cost
V) To increase profitability Most bankers blame the weak technology platforms of
merchant outlets for incidents of frauds apart from over-
Risk Management sights, deviation from existing controls and collusion between
employees and outsiders. A few private banks are already
To manage strategic and operational risks effectively, banks
need to develop information systems to monitor the finan- taking steps to strengthen the systems and processes at
cial exposure resulting from their involvement in e-com- merchant establishments to reduce the scope of skimming
merce. frauds.
The biggest worry, however, is the absence of 3-D secure
On the wholesale side, banks have made advances in set-
authentication protocol across many nations in southeast
ting up risk management systems that model how much
Asia, Europe and Americas. The 3-D secure is mandated in
value is at risk under alternative assumptions about inter-
est rates, the relative values of financial instruments, and India for all online transactions. It provides an additional
layer of security as the customer has to key in a password
other market conditions. In addition, e-commerce is still a
relatively new phenomenon without a long history of results apart from card details to complete an online transaction.
from which to formulate expectations about risk.
Indian banks have often found that fraudulent transactions
Banks do have considerable experience, however, in man- in their clients' accounts have taken place on sites that do
aging certain aspects of operational risk. For example, if not have 3-D secure mechanism. The situation is serious.
banks draw on their experience with wholesale payments There is an urgent need for all stakeholders to sit together
systems, they will establish back-up computer systems for and plug the points of frauds. We hope that when central
their on-line activities. These systems will be located at re- banks meet, there will be a discussion on this and mandat-
mote contingency sites that do not rely on the same infra-
structure support as the primary site.

Furthermore, in monitoring e-commerce systems and trans-
actions for evidence of tampering or fraudulent activities,
banks might look to the technology they use in checking
credit card transactions for unusual patterns that could in-
dicate a lost or stolen card.

Credit card issuers in the country are stepping up efforts to

BANKING FINANCE | DECEMBER | 2016 | 29

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