Learning Objectives:

  • Identify key cyber threats in digital banking.

  • Explain authentication and security protocols.

  • Understand data privacy and regulatory compliance.

6.1 Cyber Threats and Vulnerabilities
Digital banking faces a range of cyber threats . Common threats include:

  • Phishing: Deceptive emails or messages seeking sensitive information .

  • SIM Swap: Fraudulently porting a mobile number to gain access to banking apps .

  • UPI Frauds: Unauthorised UPI transactions through social engineering .

  • Malware and Ransomware: Malicious software designed to disrupt systems or demand payment .

  • Man-in-the-Middle (MITM) Attacks: Intercepting communication between the user and the bank .

6.2 Authentication and Security Protocols
Security measures include:

  • Multi-Factor Authentication (MFA): Requiring multiple forms of verification for system access .

  • Biometric Authentication: Using fingerprints, facial recognition, or other biometric data for identity verification .

  • AI-Based Fraud Detection: Using machine learning to identify suspicious transaction patterns .

  • Behavioural Biometrics: Analysing user behaviour (e.g., typing patterns, device usage) for anomaly detection .

  • Data Encryption: Protecting data both in transit and at rest .

6.3 Data Privacy and Regulatory Compliance
Data protection is governed by regulations such as the DPDP Act 2023 in India and GDPR in Europe . Compliance requirements include:

  • Data Localisation: Storing data within the country of origin .

  • Informed Consent: Ensuring customers explicitly consent to data collection and use .

  • Data Minimisation: Collecting only the data necessary for the service .

  • Regulatory Frameworks: RBI’s cyber security framework for banks and Master Directions on Digital Payment Security Controls .

 
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