Are we Future Ready-II?

Pallavi Mody

Author: Pallavi Mody

Date: Wed, 2016-09-21 19:01

This blog is the second in the series based on the book The Industries of the Future by Alec Ross. This blog shares thoughts on coded money, markets and cyber security.

The journey of money that moved from coins-cash-cheques-plastic cards is on the cusp of a change in the form of digital money or coded money. PayPal, Google Wallet, Bitcoin, WebMoney, ApplePay, Paytm are some examples of digital or coded money that facilitates transactions over the internet. Coded money helps to make the commerce more fluid. It allows the consumers to complete transactions without being tied to their wallets and merchants from being tied to a traditional cash register and credit card machine.

What is interesting is that this innovation is neither restricted to advanced countries nor to the rich. Unified Payment Interface (UPI) introduced in India would be available to everyone who has a smart phone and a bank account. UPI would help India move towards a cashless economy by carrying on transactions through digital money. It is simple to operate; a unique UPI ID would be created by using your phone number that is linked to your bank account. For an example, if your mobile number is 3333333333 and you have a bank account with the ICICI Bank, your UPI id may be 3333333333@ICICI. To send money, add recipient id, for e.g. 6666666666@YES (the recipient mobile number 6666666666 with the recipient bank account) in the app and ‘send money’ through UPI. The money gets transferred instantly to the bank account of the recipient in a secure system. As the then RBI Governor Dr. Raghuram Rajan said during the UPI soft-launch, the system is designed to turn your smartphone into a payment bank that is available 24/7.

Coded markets in the form of Airbnb and Uber are changing the way hotels and taxi services work by creating value out of latent goods. Why should your spare room not earn rent or car remain parked for the day when you are at the office? The networked world has made it possible to create markets from such underutilised valuable goods. This has led to win-win for both; buyers and sellers. Travis Kalanick, founder and CEO of Uber, hopes that people would stop owning cars in the future.

Will such markets be inclusive? Coded markets would reach the world’s most isolated communities and link them to the global economy. The application of code to commerce will provide new opportunities for the little guy in any part of the world to receive, hold, spend, or transfer money. I know of a bespoke designer who makes leather covers for mobile phones for customers across the world. The proverbial dry fruit merchant from Kabul will not have to stay away from home to sell.

Would it be safe to deal with large amounts of money on the internet? The technology in the era of ‘Internet of Things’, with smart cities, smart homes, smart cars and globally networked computers is also available to hackers and terrorists. But then, did we ask similar questions when plastic money and ATMs came?

Cyber security is an emerging area. It would thrive on ‘fear and ignorance’. If a student were to ask me about the most lucrative career in the future, without blinking an eyelid, my answer would be cyber security.


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Growth in technology front is an interesting argument; where some believes that ease in transaction will lead to more development and others are not confident about the security. It indeed has its advantages but the focus should be equally given to some of the major disadvantages. PWC report on cyber crime highlighted interesting points; 32% of organization were affected by cyber crime and 34% think they will be affected in coming 2 years. Interestingly there are 66% of organization who know threats of cyber crime but only 37% of organizations have a cyber crime response plan. So, need to make organizations and consumers aware of the safety precautions is also very important rather than focusing only on promoting digital era. Out of every 10; 1 is affected by cyber crime whether on social media or fraud. More than 18 victims per second is very strong data which needs to looked into seriously. As rightly mentioned, more cyber crime officers are the future to prevent the same as digital payments are matter of trust. Once you lose the trust, it’s very difficult to convert. Also, what does digitization is doing, its making our life comfortable. Comfort leads to ignorance. Hence to educate your audience in benefiting the digitization in safe manner constantly is very important. In my opinion, digital era will create convenience but traditional mode of payment will still be 1 step higher.

Thank you ma’am, for sharing your viewpoint on this topic. The way you shed light on the issue of digital banking and cyber security drew me into the article. I really admire the way you have looked at the avenues of digital banking and then addressed the importance of cyber security as a field of work. With the increasing number of smartphones, digital banking has taken the place of plastic money. Given the speed with which the number of users are hooking up to this, the penetration is only going to increase. According to RBI data, the money transacted via digital banking grew a whopping 369% making it to Rs.800 crores in last October alone. Such is the acceptance of this new banking methodology. The option to bank any time of the day and alleviation of the need to go to bank has really caught on the smartphone generation. Governments initiatives like UPI and BHIM app have also helped in getting users on this platform. While in case of digital banking, the banks are the same, the platform has changed enormously. Bank websites can be accessed from remote location. The only requirements are a smart phone and an internet connection and anyone can visit the bank at the click of a button. But with every new benefit of any technology comes the risk too. With such high numbers of people jumping onto the platform, the question of security becomes paramount. The older generation is still reluctant to move to the new platform. The reason being that none of armed security guards and the cameras are visible as they are in case of traditional banks. Building trust for the platform now is one of the main challenges for the banks. The very selling point of digital banking is also a bane for it. While the person had to be physically present in a bank or ATM for a robbery, there is no such restriction in case of digital banking. It is possible for any hacker sitting in any remote area of the world to break into the security of the bank and get away with millions of rupees. The security breach of Bangladesh Bank clearing up US$951 is an example of this. Keeping customer data intact against the increasing number of breach attempts has become one of the most important tasks for the banks. Cyber Security, in this scenario, becomes one of the most sought-after professions. As the banks are increasing their reach among the public, hiring bankers for their branches, engineers for managing their websites, they are also hiring security analysts to ensure that their platforms are safe. Penetration testers, security consultants, auditors are some of the professions that have come up in wake of the ever-increasing need for internet security. Tech giants have also come up with new tools, online courses and certifications in the field. Digital banking brings great prospects digitization of the banking sector but it also brings a responsibility on the banks to ensure 360-degree safety for its customers. Only then can we see a sustainable future for the new banking system.

“Fintech” has been the new buzz word of the town. Technology adoption has been high in India triggered by the rise of adoption of mobile devices and increasing internet penetration levels. Start-ups have come up with disruptive business models to mark their presence and stay in the space. Though start-ups enjoyed boom in the initial years of Fintech (2009-10), the investor sentiment has now slowed down and markets are showing signs of consolidation. More than the market shares, investors are now getting interested in profitability which still has been an area of challenge for the players. Coded money or cashless payments is one of the hot segments under Fintech which has seen rapid evolution. The most recent developments are around crypto-currencies and digital wallets where start-ups have tried to be innovative and tweaked their business models multiple times. The value of convenience, digitisation and inclusion have been the key drivers behind the adoption of coded money. Sadly, this wave of technology has created storms only in the Tier 1 and Tier 2 cities with Tier 3 still struggling to find its way through. Having mentioned about the positives, I would like to draw your attention towards the challenges that exist in the adoption of coded money especially digital wallets. Almost all wallets including UPI require a smart phone. Considering that India has a huge BOP population (~80%), their affordability issues are evident and the element of inclusion tends to deviate from the government’s vision of creating a cashless economy. Also, internet penetration has been slow in the ~6 lakh villages in India which still struggle for connectivity. Dial-up connections / 2G services are not the norm anymore and most mobile apps these days don’t connect easily thus aggravating hassles. While Airbnb and Uber have disrupted the hotel and travel industry, their success and visibility is again limited to the Tier 1 and 2 cities only. Tier 3 cities, towns and villages still struggle to find basic infrastructure for commuting and accommodation. The only way government can achieve its vision is by conducting a massive infrastructural overhaul which would then set the premise for the adoption of technology at a massive scale. As much as we want to believe, that digital transactions are safe under strong firewalls and computer codes, hackers still find ways to breach the security barriers. The Equifax cyber-attack in the USA in May which affected more than 140 Mn of the population and led to more than 15% overall fraud attempts in their systems and the recent Ransomware attacks on India are two such examples which have brought forward the leaks in the security systems of the firewalls. This opens a plethora of opportunities for the improvement in the cyber security infrastructure and would potentially create significant employment opportunities in the future.

Digitalization is affecting every aspect of banking, and in a digital world, stability and reliability of the bank’s IT platform is crucial. Interruptions or any kind of breaches into the systems can cause major problems, both for customers, suppliers and employees. Dealing money through internet is a risky business. In today’s world, smartphones provides lots of app. But while installing any app, it always ask for permission to visit your contacts/media etc. You have to give the permission only after the app will operate. Now how safe it is to allow the app developer to know your contact/media etc. I note my bank account number in my phone contact. May be many of us do that . How secure is my account number than? Cybersecurity is the body of technologies, processes and practices designed to protect networks, computers, programs and data from attack, damage or unauthorized access. Ensuring cybersecurity requires coordinated efforts throughout an information system. Elements of cybersecurity include: Application Security, Information Security, Network Security, Operational Security, Disaster Recovery and End –user education. One of the most problematic elements of cybersecurity is the quickly and constantly evolving nature of security risks. The traditional approach has been to focus most resources on the most crucial system components and protect against the biggest known threats, which necessitated leaving some less important system components undefended and some less dangerous risks not protected against. The National Institute of Standards and Technology (NIST) recently issued updated guidelines in its risk assessment framework that recommended a shift toward continuous monitoring and real-time assessments. According to Forbes, the global cybersecurity market reached $75 billion for 2015 and is expected to hit $170 billion in 2020. So, of the era of cyber security is coming in a big way.

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