The quality of digital banking services has come into sharp focus following the regulatory action by the RBI on HDFC Bank for outages of its internet and mobile banking and payment systems.

The RBI has directed HDFC Bank to temporarily halt sourcing of new credit card customers as also the digital business generating activities under its proposed Digital 2.0 programme.

State Bank of India’s YONO app has also been facing technical glitches for the last two days with users complaining that they are unable to even login let alone transact.

Other banks are no strangers to these problems either, though the glitches mostly get resolved in a matter of hours. But the frequency of these outages poses a challenge to the government’s digital payments push. It also creates problems for customers, many of whom are unable to visit bank branches due to the Covid-19 pandemic.

Experts say a large number of these technical glitches come up when usage far outstrips the capacity, but note that banks need to work on their IT systems given the huge load following the pandemic.

“It’s a tragedy waiting to happen. None of the Indian banks’ core banking systems (CBS) are geared to take the load,” said Vishwas Patel, Executive Director, Infibeam Avenues, and Chairman, Payments Council of India. “First with demonetisation and now with the pandemic, e-banking and e-transactions have grown 10 times. None of the banks has any scalability plan to take on the load.”

For instance, every UPI transaction hits the banks’ CBS, pointed out Patel. “The high rates of transaction failures and pile-ups in credit reversal dues are triggering alarm in several banks with their outdated digital infrastructure being unable to cope with the sudden surge,” he added.

Cloud to the rescue

“I don’t think infrastructure is a problem for banks, most of them are quite modernised,” said Mandar Agashe, founder and Vice-Chairman, Sarvatra Technologies. “A sudden surge of transactions usually causes such an outage. Moving to cloud will help banks be better prepared for the future.”

The rising popularity of digital modes of payments is clearly evident with recent data that show a sharp upswing in UPI transactions.

According to RBI data, as on September 30, there were 5.86 crore credit cards and 86.54 crore debit cards outstanding in the country. September also recorded 209.19 crore mobile app-based payments and 28.22 crore internet banking transactions.

Additional load

“Large numbers of small-value UPI transactions are putting extra load on banks’ CBS. Banks will have to enhance the capacity of their CBS to support more transactions per second,” said a senior banker.

Along with a jump in digital banking, there has also been a rise in the number of customer complaints. For example, there was a 74 per cent rise in the number of complaints to the Banking Ombudsman in FY19 to 14,794 under the head ‘Mobile/Electronic Banking’, per RBI data.

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