Banks focusing on client acquisition less on grievance redress

Reserve Bank of India (RBI) Deputy Governor M Rajeshwar Rao said at the annual FICCI-IBA banking conference that “While banks are hugely invested in forging new and innovative ways of customer acquisition, very little seems to be going on improving the customer grievance redress mechanisms. To me, this seems very odd for a sector which prides itself on being a service industry.”

Emphasising on the need to fortify cyber security and prevention of cyber frauds, the deputy governor said that there are increased cases of frauds and data breaches among customers, and the efforts of the banks to provide timely solutions to customer grievances have not kept pace with the explosion in technology and products.

“The banking landscape is evolving with increase in financial inclusion, customer access, product choices, and convenience. However, the risks to the consumer have also increased. There are increasing instances of frauds and data breaches,” Rao said.

The deputy governor also said that an excessive exposure to risk within banks and financial institutions can lead to catastrophic outcomes if not effectively managed.

Rao added that technology-induced frauds, such as deceptive apps, privacy breaches, and the emergence of deepfakes have become prevalent. He said that digital evolution has given rise to a new form of mis-selling known as ‘Dark Patterns’.