Bank of Baroda’s Digital Banking App Controversy: A Troublesome Situation
Bank of Baroda (BoB), one of India’s largest public sector banks, has been embroiled in a controversy over its digital banking app, bob World. In July 2023, an investigation by The Reporters’ Collective (TRC) and Al Jazeera revealed that BoB agents had been linking unauthorized mobile numbers to customer accounts without their consent, in order to boost the number of users on the app. This practice put customers at risk of fraud, as anyone with access to their registered mobile number could potentially gain control of their bank account.
The controversy has had a significant impact on BoB’s reputation and financial performance. The Reserve Bank of India (RBI) has banned BoB from onboarding new customers onto bob World until it rectifies the deficiencies in its customer onboarding process. The bank has also been fined ₹1 crore by the RBI for violating its regulations.
In addition to the financial losses, the controversy has also damaged BoB’s brand image and customer trust. Many customers are now concerned about the security of their money and are hesitant to use BoB’s digital banking services.
Impact on Customers
The boB World controversy has had a direct impact on customers in a number of ways:
- Fraud risk: Customers whose mobile numbers were linked to their bank accounts without their consent are at risk of fraud. Fraudsters could potentially gain access to their bank account and steal their money.
- Financial losses: Some customers have already lost money to fraud as a result of the controversy. For example, one customer reportedly lost ₹1.5 million after his registered mobile number lapsed and was reassigned to someone else.
- Inconvenience: Customers who are unable to use BoB’s digital banking services may experience inconvenience. They may have to visit a bank branch more often to conduct transactions.
Bank’s Response
BoB has taken a number of steps to address the controversy, including:
- Suspending responsible employees: BoB has suspended more than 60 employees over irregularities pertaining to the onboarding of new customers to the bank’s digital app.
- Initiating an internal investigation: BoB has initiated an internal investigation into the matter. The investigation is expected to be completed within three months.
- Implementing corrective measures: BoB has implemented a number of corrective measures to strengthen its customer onboarding process. These measures include:
- Requiring customers to provide their Aadhaar number and PAN card details when onboarding onto bob World.
- Conducting a video KYC verification of all new customers.
- Sending a one-time password (OTP) to the customer’s mobile number before linking it to their bank account.
Way Forward
The boB World controversy is a reminder of the importance of security in digital banking. Banks need to have robust security measures in place to protect their customers from fraud. They also need to be transparent and accountable to their customers.
BoB has taken some steps to address the controversy, but it needs to do more to regain customer trust. The bank needs to ensure that its corrective measures are effective and that it is taking all necessary steps to protect its customers from fraud.
In addition to the measures already taken by BoB, the following steps could also be taken to improve the security of digital banking apps in India:
- Strengthening regulations: The RBI could strengthen its regulations governing the onboarding and KYC process for digital banking apps. For example, the RBI could require banks to conduct a physical KYC verification of all new customers, even if they are already customers of the bank.
- Raising awareness: Banks and the RBI could raise awareness among customers about the risks associated with digital banking and how to protect themselves from fraud. For example, banks could send educational messages to customers about the importance of keeping their mobile number and other personal information secure.
The boB World controversy is a serious issue, but it is important to remember that digital banking is still a relatively new and evolving technology. Banks are learning from their mistakes and are taking steps to improve the security of their digital banking apps. Customers should be vigilant and take steps to protect themselves from fraud, but they should not be afraid to use digital banking services.
