STUDY OF RISK MANAGEMENT IN DIGITAL

TRANSACTION IN BANKING SECTOR

 DECLARATION

I hereby declare that the project work entitled “STUDY OF RISK MANAGEMENT IN
DIGITAL TRANSACTION IN BANKING SECTOR” submitted to Alliance School of Business,
Bangalore, is a record of an original work done by me under the guidance of Dr. Satish Menon Ph.D.,
PMP. The information submitted herein is true and original to the best of my knowledge.

Date: Signature of the Student

Place:
 Certificate

This is to certify that Mr. Chandrahas Thakur has completed the Report entitled “ STUDY OF
RISK MANAGEMENT IN DIGITAL TRANSACTION IN BANKING SECTOR” under my guidance

for the partial fulfilment of the Course: Project Work in Term – IV of the Executive Post
Graduate Diploma in Management.

Signature of Company Guide

Name of the Company Guide: Akshaya Barik

 ACKNOWLEDGEMENTS

I would like to express my sincere thanks to my faculty guide, Dr. Satish Menon, for giving me this
great opportunity to do a project on “STUDY OF RISK MANAGEMENT IN DIGITAL TANSACTION
IN BANKING SECTOR”.

I would also like to thank my Company guide Mr. Akshaya Barik for his assistance and cooperation in
completing the project. Without their support and suggestions, it was not easy to complete the project.

Chandrahas Thakur

Signature
CONTENTS

1 CHAPTER 1: INTRODUCTION
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2 CHAPTER 2: METHODOLOGY
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3 CHAPTER 3: FINDINGS & DISCUSSIONS

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4 CHAPTER 4: CONCLUSIONS & RECOMMENDATIONS

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SUMMARY
Here, we will come to study about the risk in digital transaction in Banking sector. In Banking, various
types of transaction is done by the customers either manually or digitally. Manual transactions are done
from many years. In today’s world, all things are done digitally and in banking also, transactions are done
digitally. Here, we know about what the challenges are faced by the bank and customers in digital
transaction and, we will know what the steps are taken by bank to overcome it. In the end, we will know
about the solutions to the problems in digital transactions in banking sector.
Chapter 1: Introduction
In this project, we will study about the risk in digital transaction in banking sector. Banks plays an
important role in economy for the country. Banks are the backbone of the country. They receive deposits
and give loans. They are regulated by National Government and Reserve Bank of India. People keep their
cash in banks as for them it is a safe place. Various transactions are done in bank like cash deposit,
withdrawals, cheque payments, bill payments etc. They also provide different loans, credit card etc. to
their customers. People are getting interest in their savings account from bank. Just like other business,
banks also earn profit from their customers. So, there are two types of transactions- manually and
digitally. Since the formation of banks, transactions are done by customers manually till now. But digital
transaction has also been introduced from few years which is very beneficial for customers. As we all
know, digital transaction is a seamless system which includes one or more parties where transaction takes
place without the need of cash. It involves the collaboration of several companies. In early days, all
transactions were done manually by the people for which they have to suffer a lot like visit to bank for
transaction, standing in queue, no links in bank etc. At present also, people are preferring bank for doing
their transaction. But in today’s digital world, digital mode is taking place everywhere and people are also
being educated by banks to do their transaction digitally. In digital transaction, they can do all their
transaction online without visiting the bank like fund transfer from one bank to another bank, checking
account balance, getting online statements, requesting for any cheque book, passbook, paying for a
purchase online, swiping a debit card at a store etc. It converts a traditional cash -operational society to a
cashless one. All these things can be done online. So, there are two types of method for online
transaction- Net banking and mobile app. These are the two ways from which the online transaction is
being done. Digital transaction saves time of the customer. There are various benefits of digital
transaction.

But, as there is benefit, then there are some risks involves in it also. Technology is such a thing that it is
good and bad in many ways. In digital transaction, there is a risk of fraudulent activities. One of the
important fields is to cover the digital compliance and cybersecurity. Laws and regulations should be
regulated among the banks and financial institutions to ensure the compliance. Now a days, many
fraudulent activities take place in digital transaction. The IT Team of bank are responsible for preventing
these things from happening. There is a lack of regulation on the latest financial technologies used by the
banks in their effort for digitization such as using APIs, biometrics, AI, Robo advisory and blockchain.
The IT Team is responsible for all the control in digital transaction. Now-a-days, there are much news
coming on hacking of electronic platforms which is not good for the people. This leads to the loss of
reputation of the banks. This eventually leads to loss of funding or customers. Incorrect transaction
processing, compromises in the integrity of data, data privacy and confidentiality, unauthorized access to
bank systems etc. are the main important risk factors in digital banking.

Now, when we are taking about banking, then let’s talk about the organization where I am working
presently, i.e., ICICI BANK.

ICICI Bank (Industrial Credit and Investment Corporation of India) is the leading private sector bank in
India. It was formed in 1955 at the initiative of the World Bank, the Government of India and
representatives of Indian Industry. ICICI Bank was incorporated in 1994 as the part of ICICI group in
Vadodara. The principal objective of the bank was to give support financial institution for providing
medium-term and long-term financial support to the Indian businesses. It has also many group companies
such as ICICI Prudential Life Insurance Company, ICICI Lombard General Insurance Company, ICICI
Venture, ICICI Direct, ICICI Foundation etc. These are the companies which comes under ICICI Group.
They have their own role in enhancing the banks business. The bank has a total asset of Rs. 14.76 trillion
on September 30, 2020. It has a current network of 5,418 branches and 13,463 ATMs across India. It has
a presence in 17 countries. ICICI Bank offers a wide range of products and financial services to its
customers through its variety of channels and group companies. It offers products and services such as
online money transfers, tracking services, current accounts, saving accounts, time deposits, recurring
deposits, mortgages, loans, credit cards, debit cards etc. Bank gives 4% interest in the savings bank
account It has contributed to a number of Indian institutions to establish financial infrastructure in the
country over the years. Recently, bank focus on its major products like Fixed deposit, Life Insurance,
credit card, personal loan, home loan, two-wheeler loan, auto loan, business loan etc. The main focus is
on customer service because it is the backbone of the bank. Bank gives good service to the customer so
that the customer will be happy by the bank products which will increase the bank productivity. It focuses
on digital transaction which creates very easy tasks for the customer. Doing transactions through digitally
helps in risk free transactions and saves time of the customer. It has two types of digital transactions like
net banking and mobile banking. Net banking can be logged in through customer id and password. It has
mobile banking names as immobile, instabiz which can be operated through mobile and all types of
transactions, requests, deposits, investments, recharge etc. can be done through mobile banking. It has
also focus on rural banking giving also. It provides loans at a very affordable price like gold loan, Kisan
Credit card, Self Help Group, Tractor finance etc. These loans help in fulfilling the needs of the people.
Bank focuses on retail banking also. It offers savings account, current account, fixed deposit, recurring
deposit, SIP etc. Bank also care about the customer health and future. For that it offers life insurance,
general insurance, health insurance etc. It also offers various retirement plans like pension scheme.

Bank has a committee who takes decision about the bank.