From The Economic Times · ET Online · · 1m
Banks' Tech Risks Now Core Banking Threat
RBI warns tech failures could disrupt banking even with strong finances.
In brief
RBI warns tech failures could disrupt banking even with strong finances. Banks must treat technology as a core risk source, not just an enabler, to avoid service disruptions. Originally reported by The Economic Times.
RBI Deputy Governor
RBI Deputy Governor Rohit Jain says technology is now the bank's risk architecture.
“Technology is no longer solely an enabler of banking. Technology architecture is becoming the risk architecture of a bank”
Tech Risk Impact
A tech failure can disrupt services even when banks have strong finances.
“A bank may have adequate capital and liquidity, sound governance and a strong balance sheet, but an unavailable technology system can leave customers unable to access essential financial services”
Tech Perimeter Expansion
Banks depend on interconnected tech systems from core banking to cybersecurity.
“Technology is embedded in almost every critical banking function, from core banking and payments to customer onboarding”
First-Order Risk
Tech risk must be treated as a top-level enterprise risk, not IT department issue.
“Technology risk should now be treated as a first-order enterprise risk, comparable in importance to traditional balance-sheet risks”
Third-Party Vulnerabilities
Vulnerabilities in fintechs or cloud can affect multiple banks.
“A vulnerability at a fintech, software provider, payment interface or common cloud environment can have consequences beyond a single institution”
AI Deployment Risks
AI could improve services but also amplify errors in credit and fraud decisions.
“Ai is expected to fundamentally change the financial sector, but governance must precede scale”
What Happens Next
Banks must prioritize tech resilience to maintain financial stability.
“The advantage will not necessarily belong to the institution that deploys the most sophisticated technology; it may belong to the institution that can understand, govern, and deploy technology with the greatest degree of discipline and foresight”
Here's the gist
Banks must treat technology as a core risk source, not just an enabler, to avoid service disruptions.
