The Banking app scam that shook the banking world

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In Banks we trust

A bank is a trusted financial institution that earns its license from the government after a lot of scrutiny. All precautions are taken to ensure that it adheres to the central bank laws and follows all the rules.

This is done to ensure the safety of the funds of its clients and operate by the rules of the financial sector of the land.
However what would happen if the employees of the bank start to run a scam.

Does this look like the plot of a movie?

Well on the contrary this is the bitter truth and reality that shook the banking world in India
Ironically this is not a private bank but a bank run by the government.
The bank in question is the Bank of Baroda
It is interesting to note that this is not some small bank but a big nationalized bank and the seventh largest bank by market cap.

What is the scam

Bank employees of Bank of Baroda were given the task of promoting the bank's mobile app which is known as the “BOB world” app.
This app lets a customer access quite a few digital banking services which include.
Access to loans
Savings
Options to invest
Payment of Bills
Booking Bus tickets and making hotel reservations

Each branch had received a target to register customers to its mobile “BOB world” app.

The employees started cutting corners and as they had information about the entire customer database they misused this information.
They filtered out all those bank accounts which did not have a mobile number linked to them.

They began to register these bank accounts for the digital app.

From where did they get so many mobile numbers?

Registration of the app required a mobile number.
So the innovative employees used the mobile numbers of

• Staff members
• Sanitation workers and
• The security personnel associated with the bank.

This was done to meet the sign up targets for the digital app.

Post the initial restoration they would deregister the account from the app.
This way they could rinse and repeat the mobile numbers to link a large number of bank accounts with the knowledge of the account holder or their consent.

To top it all, each branch of the bank designated a nodal officer to oversee this process.
This misappropriation of information would have continued had it not been for Al Jazeera and The Reporters uncovered this scam and brought to light.

It is quite shocking that the bank compromised the security and information of the account holders by linking the bank details to the mobile numbers of strangers.
All this happened just to meet the employee targets?

Once the NEWS of this scam came to light RBI or the reserve bank of India has stopped the bank from enlisting any new members to its app until rectification of the deficiencies took place was done to the satisfaction of RBI
RBI also wants the bank to strengthen the processes related to app onboarding.

Bank of Baroda has set up an inquiry to investigate the matter and suspended several employees involved in the process these include
11 assistant general managers who acted as area general managers and head of 25 different branches.

This is only one scam that came to light

Scams like these could be very common as banks hold all the financial information of a customer. They are free to use this information whatever way they like.
There is no one to question them if they sell the bank's client database to a third party for their own personal benefits or a little profit.

There has been a discussion that unrealistic targets for bank employees lead to such irregularities. If this is the case then surely there could be many more such scams and irregularities happening in banks all around us.

Civil societies have requested RBI that it should set up a group of information security advisors for in depth investigations in all banks which are using mobile banking apps.

In this way the banking sector will become more secure.

Final thoughts

It is easy for the bank employees to access and manipulate the bank account holders information.
Add a mobile number and enabling phone banking on accounts gives them the power to withdraw or transfer funds as well. Thus this is a very dangerous situation.
If there are no serious punishments for such activities such activities would only be on the rise.

Posted Using InLeo Alpha