Difference Between Bank and a Digital Bank When it Comes to User Privacy

An important factor that every digital bank pays attention to is user privacy. Digital banks use various security measures to protect their customers’ privacy.

In this article, we will discuss how digital banks secure user privacy.

Banking is a very high-risk sector. Therefore, it is important for banks to safeguard user privacy to gain customers’ trust. User safety has become more important since digital banks have entered the financial landscape.

What is Digital Banking?

Digital banks allow customers to avail banking services online. Many traditional banks offer online services. Furthermore, there are neobanks that are digital-only banks with no physical presence. One such neobank is Fi. This bank enables a person to open an account online and avail all the services via their smartphone. Customers don’t have to visit a bank anytime. This is a big difference between a physical bank and a digital bank. Hence, digital banks make banking convenient for their customers.

While customers can avail all the banking services online with digital banks, one of the most important concerns of digital banking is user privacy. As digital banks can be susceptible to cyberattacks, customers want to understand the security measures used to secure user privacy in digital bank.

Let’s take a look at some of the security features of digital banks that can make them safe for customers-

• Encrypted Data

Digital banks encrypt data in a way that no one else other than the bank and the customer can understand it. It can be a very difficult task for cyber thieves to break the cipher strength.

• Login Details

One of the first steps that a bank takes to secure accounts is providing customers with login credentials. A customer can set up the login credentials. Digital banks don’t allow account access until the login details are entered.

• Risk Assessment

Banks regularly assess the risk of their IT infrastructure. The information that they gather during the assessment is used to understand whether the current security measures can protect critical data or not. It also helps in detecting any weak spots in the infrastructure.

• Account Management

If a customer wants to change their password, add a new beneficiary or a payee, change address, etc., then digital banks carry out new checks to ensure the safety of the account.

• Cybersecurity Policy

To ensure cybersecurity, governments set up various standards for banks. Banks need to comply with these standards in order to operate. Thus, they establish a cybersecurity policy that comprises all the requirements that a bank should meet, the tools that they will be using to ensure cybersecurity, and the practices they plan on actioning.

• Spending Restrictions

There are some banks that allow customers to set a daily limit or upper limit on digital banking transactions in order to reduce risk.

• Monitor Customer Activity

Banks monitor user activity on their network in order to detect suspicious incidents. By tracking user activity, they can prevent an attack.

• Provide Secure Money

Money deposited by customers is safe with banks as it is insured up to Rs. 5 Lakhs according to the RBI’s insurance deposit scheme.