AI in this decade is what digitsation was in the last: RBI governor
Banks must understand artificial intelligence deployment for future success. AI can enhance financial inclusion and improve existing public good projects. Careless AI use risks new forms of exclusion and instability for banks. The RBI plans an approved AI governance policy and a testing sandbox. Banks need deliberate strategies, sustained investment, and strong governance for AI.
In a speech at a conference organized by FICCI-IBA, Reserve Bank of India (RBI) Governor Shaktikanta Das drew parallels between the impact of digitalization in the 2010s and the potential of artificial intelligence (AI) in the current decade. He emphasized that the success of AI in banking will depend not on how quickly banks adopt it, but how well they understand its deployment.
Das highlighted AI's potential to accelerate financial inclusion and improve customer service, but warned that careless implementation could exacerbate exclusion and instability. He proposed that RBI plans to establish a governance policy for AI with clear accountability and will continue to provide a sandbox for testing innovative use cases.
The governor stressed the critical roles of bank boards, risk officers, management, and regulators in leveraging AI for credit delivery, customer service, operational efficiency, and preventing digital frauds. He urged banks to deliberate on their understanding of this AI journey and build sustainable partnerships.
Das also cautioned about the risks associated with AI, including lack of information on loan rejections, bias, and concentration of credit and trading decisions among a few financial models or technology vendors. He emphasized that the ultimate responsibility for AI-driven decisions lies with the bank, not the vendor or algorithm. He cautioned against over-reliance on third-party vendors and the need for banks, especially small ones, to build partnerships and manage risks effectively.
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