While financial institutions (FIs) in India have come together to work on blockchain, full-scale deployment of the technology will have to wait for the evolution of a concrete business model around the technology, Connie Leung, financial services business lead – Asia, Microsoft, told Shritama Bose. Edited excerpts:
Financial institutions in India have been digitising rapidly, but do you think they’ve paid enough attention to security?
I think security is always the priority for our customers (FIs). Part of it is because of the fines and all of the new regulations that have come up. We actually need to do much more in passing new security standards and compliance requirements.
Employees of FIs in India may not have the expertise to handle complex tech. Is enough being done to train them?
There are two sides of it. One is what’s new, because when you talk about digital transformation, it’s not doing everything the same way. It’s actually doing everything. One important thing is to have the right talent to understand what is the new way of process, and new way of working in each organisation. On the other hand, when you have new technology you also have data management. It comes with better security control and also reduces the human error.
An area of great concern is data security. There has been a recent major data breach in the US. How prepared is the system in India to fend it off?
The challenge for the entire industry is that there is a focused crime unit outside that is doing cyber-attacks and that has huge funding. So it’s not just financial services. There’s a huge threat to the entire industry. If you look at the regulators, they are all promoting cyber-security concepts. They are sitting together and actually collaborating. I think that is one area where you see everybody is not in the competing space; they are collaborating. Also, there are things to do with process rather than technology, such as, changing passwords regularly. The other thing is you have to patch. If you don’t put in place the latest patches, you are going to be vulnerable. People are getting into that a little. The other way to get into it is to get on to the cloud as it is more secure and connected. If everyone moves to the same security standards, it makes things much more difficult for the hackers.
Blockchain has caught the Indian banking sector’s fancy. When do you see a full-blown deployment?
I have not seen one technology being talked about in our industry as much, and with so much interest, as blockchain. Fundamentally, blockchain is a new technology that solves certain problems. One of the problems is security risk. Blockchain is good for multi-party transactions, but it’s not good for everything. What comes with a multi-party system is that you need to have a governance model. That does not exist. I think everyone is interested and is doing something. But, you cannot expect that they will be live tomorrow with a transaction without understanding what exactly they are doing to each other. The business model needs to be agreed upon and that takes time.