'Fintech platforms are agile, but increase risk of misuse'

Fintechs often "operate outside the regulatory envelope and are unconstrained by legacy systems that typically encumber traditional banks," he said, underscoring their "agility and adaptability in offering customised financial products."

Swaminathan added that while fintechs "offer immense benefits such as accessibility and hyper-personalisation; they also heighten the risk of misuse and fraud. They can expose consumers to the risk of cyberattacks, data breaches, and, often, some financial harm."

The RBI's deputy governor pointed out that consumers may struggle to resolve disputes or obtain compensation due to a lack of transparency on the part of such players.

"These new risks must be addressed through robust , enhanced , and increased consumer awareness initiatives," he said.

In India, regulated entities are required to implement multi-factor authentication for all-electric mode payments; they have to conduct risk assessments of the safety of digital payment products, identify suspicious transaction behaviour and alert customers about it, and so on.

"Despite all these measures, unauthorised transactions due to compromised credentials from phishing attacks or customer negligence are not uncommon," he said.

The deputy governor said that risk associated with digitatisation can be mitigated by implementing robust regulatory frameworks, enhancing cybersecurity measures, and promoting consumer awareness. These measures can also protect consumers from exploitation and fraud. He pointed out that even as "we focus on protecting the young, let us not forget that senior citizens are most vulnerable to financial frauds and cybercrime."