HDFC Bank and the ugly truth of outage

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Mumbai: HDFC Bank suffered a big blow to its future digital business plans at the hands of the central banking authority. Because the private sector bank failed to stop the growing number of outage services incidents in recent times.

The Reserve Bank for India (RBI) has ordered HDFC Bank to temporarily hault its upcoming digital business-generating activities and new IT plans due to the outage of services, according to reports.

RBI‘s order cited a major outage incident that had disrupted HDFC Bank’s digital banking and payment services along with its operations for over 12 hours between November 21and 22.

Besides, many of the customers had complained against the bank for unavailability of payment service to pay their bills, EMIs and carry out transactions timely.

“RBI has issued an order dated December 2, 2020, to HDFC Bank Ltd with regard to certain incidents of outages in the internet banking/ mobile banking/ payment utilities of the bank over the past two years, including the recent outages in the bank’s internet banking and payment system on November 21, 2020, due to a power failure in the primary datacentre,” HDFC Bank said in a regulatory filing.

HDFC Bank said the RBI order “has advised the bank to temporarily stop all launches of the digital business-generating activities planned under its program Digital 2.0 and other proposed business generating IT applications and sourcing of new credit card customers”.

Given the significance of this issue, RBI has sought an explanation from HDFC Bank’s top management. It has put a condition on the bank to take satisfactory measures with a compliance norm to fix the issue. Otherwise, RBI will not lift the hault on HDFC Bank’s Digital 2.0 initiatives including the issue of new cards, digital business activities and new IT planning.

“A major power failure last month at the bank’s primary datacentre at Dhirubhai Ambani Knowledge Centre (DAKC) in Mumbai had caused the outage of services,” a media report quoted a bank official.

However, the last month’s outage wasn’t the first outage incident for HDFC Bank. It has suffered several incidents of the services outage and technical glitches disrupting its business operations during the past two years.

This compelled the central bank and banking industry regulator RBI to take some action against the largest private sector bank. And put a check on its functioning and operations, particularly on the bank’s digital banking services and IT initiatives.

As far as HDFC Bank’s top management is concerned about the digital business and services and overall IT. The private bank has a very strong IT leadership team including designated CIO, CISO, IT Head, Digital Business Head and others executives that oversee bank’s digital services, security, IT, networks, infrastructure and more.

And that’s where the bank’s management need to initiate an internal probe to find if there were any technical lapses or human errors and make those individual/s accountable and act accordingly.

More so, prepare a detail report and present it to the board members along with the regulators as part of the management’s fair and transparent internal governance.

RBI’s order against HDFC Bank — is in the right direction but it should not be viewed just in context to one bank.

Since public and private sector banks are investing substantially into IT to transform their traditional banking practices with a digital future approach. They do have a strong focus and vision on a range of digital banking and payment services via the internet, mobile and social media; and also fortifying the security of digital services to deal with cybercrimes.

Regularly IT or tech audits are must for these banks and certainly, RBI as a central banking authority has a major role in providing timely guidelines, policies and monitoring that helps these banks improve and achieve their digital goals in future.

Henceforth, RBI’s move against HDFC Bank’s activities, are welcoming in the interests of the customers, the bank as well as the banking industry in India.

Interestingly, outages of digital services in the internet, mobile communication, cloud, or software application spaces are a bit common today.

But it is hard to find such examples and instances where the regulators have taken appropriate steps and even sought explanations from service providers on the outage of digital services or technical glitches.

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