RBI Deputy Governor Rohit Jain flags speed, concentration and opacity as fintech risks; says technology must serve customers
RBI Deputy Governor Rohit Jain warned financial institutions and fintech firms that rapid adoption of emerging technologies brings risks around speed, concentration and opacity. He said institutions must ensure technology works fairly, reliably and safely for customers, while retaining responsibility for outcomes even when computing, cloud infrastructure or models are outsourced.
Mumbai: Reserve Bank of India (RBI) Deputy Governor Rohit Jain spoke at the Global Fintech Fest in Mumbai, emphasizing the importance of focusing on the human aspect of technology adoption in the financial sector. In his address, Jain highlighted three key risks associated with emerging technologies: speed, concentration, and opacity. He stressed that while technological advancements have expanded the capabilities of finance, it is crucial to ensure that these developments serve customers better and more fairly.
Jain cautioned that the speed at which technology operates can make it challenging to detect and contain errors, as institutions must not only prevent mistakes but also intervene before a minor error escalates into a major issue. He also warned of the potential risks arising from dependence on a limited number of cloud providers, technology vendors, and model providers, which could lead to widespread disruption or error if a common dependency fails.
Furthermore, Jain stressed the importance of transparency and accountability in financial technology. He argued that customers affected by critical financial decisions deserve more than just a generic explanation that "the model said so." Instead, they should be provided with meaningful explanations and assurances about the reasoning behind such decisions.
At the Global Fintech Fest, Jain also announced the expansion of the RBI's FX Retail platform to include multiple currencies besides the US dollar. Customers can now utilize the platform to purchase foreign currency, remit money overseas, and reload forex cards with EUR, GBP, CAD, CHF, and AED through multiple banks.
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