Are banks investing enough in digital banking infra to prevent outages?

Banking transactions have increased fivefold in the last five years but banks have not invested proactively in digital infrastructure to support this growth.
ETBFSI Research
  • Updated On Apr 10, 2023 at 09:29 AM IST


Banks have recently reported technical glitches leading to a flood of complaints on social media, putting a question mark on the preparedness of their digital infrastructure in meeting every increasing load of transactions.

Experts feel banks are not sufficiently investing in their digital infrastructure, which is leading to such instances.

Digital transactions have increased fivefold over the last five years, but banks have not invested proactively in digital infrastructure to support this growth. Technical outages and glitches can have a significant impact, including breaches of sensitive personal data.

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Why do outages happen?

Outages often occur when there is a sudden increase in transaction volumes. This could happen at month-end, quarter-end or year-end periods or during application upgrades, particularly for customer-facing channels like internet banking and mobile banking.

When transaction volumes surge, products and services enabled on these channels may become degraded or fail altogether due to IT infrastructure reaching capacity utilization or the application being unable to handle high, concurrent volumes, or a combination of both.

Some institutions may have built up scale on their internet gateway but not on the backend, while others may have built up scale on the backend but not on the internet gateway. This unpredictability makes it challenging for banks to scale directly, and it may take time depending on the level of investment already made.

What can banks do about it?

To avoid these issues, banks will have to continuously assess the resiliency and scalability of their applications and underlying infrastructure.

Experts also noted that while banks have invested heavily in technology to improve customer experience and operational efficiency, they must now focus on managing the load of rising transactions.

Banks need to implement graceful degradation models, ensure proper sizing, and study the load systematically and proactively.

Banks must invest in necessary technological resources and security measures to prevent the loss of personal data.
  • Published On Apr 10, 2023 at 09:28 AM IST
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