Banks' biggest risks maybe sitting within

Banks' greatest risks might be found within their own technological infrastructure, according to the Reserve Bank of India's Deputy Governor Rohit Jain. In a recent speech at the SBI Banking Conclave, Jain warned that a failure in a critical technology system could disrupt essential financial services, even for financially healthy banks.

Jain emphasized that technology is no longer just an enabler for banking, but also the underlying architecture through which risks are created and managed. He stressed that a bank may have adequate capital, liquidity, governance, and balance sheet strength, but an unavailable technology system, cyber incident, or failure of a key technology dependency could leave customers unable to access essential financial services.

Recognizing this, Jain argued that technology risk should now be treated as a "first-order enterprise risk" on par with traditional balance-sheet risks. This means that boards and senior management must have sufficient technological understanding to question assumptions, assess dependencies, and ensure that resilience arrangements have been tested.

The expanding technology perimeter means that banks cannot simply outsource accountability to external providers. Vulnerabilities in fintechs, software providers, payment interfaces, or common cloud environments could have consequences beyond a single institution. Outages can quickly become financial risks, as seen in cyberattacks, banking-channel outages, and the 2024 CrowdStrike disruption.

Jain pointed to India's digital payments ecosystem as an example of the importance of resilience. According to Jain, UPI processed 24.9 billion transactions worth approximately Rs 30 lakh crore in August 2026. Banks must invest in technology not only for growth but also for risk management, continuity, confidence, and financial stability.

Artificial intelligence (AI) presents both opportunities and challenges for banks. While AI can improve customer service, fraud detection, risk assessment, and productivity, it also has the potential to amplify errors and influence decisions involving credit, fraud alerts, customer access, pricing, and service delivery. Jain stressed that appropriate validation, monitoring, human oversight, and clear accountability are essential as banks deploy AI.