Cybersecurity: A Major Concern for Mutual Funds, Says Zerodha CEO Nithin Kamath
Cybersecurity: A Major Concern for Mutual Funds, Says Zerodha CEO Nithin Kamath
Global Fintech Fest Panel Highlights Technology and Security Challenges in the Mutual Fund Industry
As the mutual fund (MF) industry becomes increasingly reliant on technology, cybersecurity is emerging as a critical concern, according to Nithin Kamath, founder and CEO of Zerodha. Speaking at the Global Fintech Fest, Kamath emphasized the importance of addressing cybersecurity risks to protect investors and ensure industry growth.
Kamath addressed the panel on the role of technology and innovation in driving the growth of the mutual fund sector. He highlighted the need for regulatory measures to simplify investment processes for non-resident Indians (NRIs) and facilitate their participation in the market.
When discussing the adoption of Free and Open Source Software (FOSS) within Asset Management Companies (AMCs), Kamath noted that integrating open source solutions into mutual fund operations is challenging, unlike in the brokerage sector. He emphasized that the mutual fund industry’s growth prospects are strongly linked to market performance. “If the markets perform well, the mutual fund sector will experience accelerated growth,” Kamath stated.
Anuj Kumar, Managing Director of Computer Age Management Services (CAMS), discussed the evolving cybersecurity risks faced by the mutual fund industry. With a significant shift towards digital access for investment management, Kumar highlighted the increasing vulnerability of accounts linked to Permanent Account Numbers (PAN) and phone numbers. “If someone gains access to your phone and your OTP, they can essentially control your entire account,” Kumar warned.
Nilesh Shah, Managing Director of Kotak Mahindra Asset Management Company, underscored the need for technology that accommodates investors of all digital skill levels. Shah stressed the importance of creating systems that are inclusive of both tech-savvy young investors and older individuals who may prefer personal interaction with fund distributors. “The system must ensure that everyone, regardless of their digital proficiency, can safely and effectively manage their investments,” Shah said.
Shah also pointed out the growing issue of fraudsters creating fake WhatsApp groups posing as fund managers to deceive investors. “We are constantly filing complaints with the cyber cell against such impostors. It’s crucial to prevent these digital scams and protect investors,” Shah added.
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