Bengaluru: RBI Governor Shaktikanta Das said here on Monday that the integration of AI in financial services brings significant opportunities for customers, banks and regulators but the cutting-edge technology also presents its own set of challenges, such as data privacy concerns arising from handling vast volumes of personal information and the potential for misuse to spread misinformation. Speaking at the Global Conference on Digital Public Infrastructure and Emerging Technologies, Das said, “Today, Artificial Intelligence (AI) is entering the financial sector in the form of services such as chatbots, internal data processing for intelligent alerts, fraud risk management, credit modelling and other processes. Integrating this cutting-edge technology into a robust and responsible DPI (digital public infrastructure) presents an opportunity to enhance the capabilities and efficiency of DPI even further.”
He pointed out that the report of India’s G20 Task Force on DPI states that the seamless merger of DPI with AI will take us to a new world of ‘digital public intelligence’. Integration of AI in financial services brings significant opportunities for all stakeholders. For customers, AI enables hyper-personalised products and faster, more relevant services. Financial institutions such as lenders benefit from advanced tools for risk and fraud management, streamlined operations and lower compliance costs. Regulators gain better monitoring and real-time surveillance capabilities, which will improve regulatory enforcement and market stability, the RBI governor said.
However, such advancements come with serious challenges, he said, adding that handling vast volumes of personal information raises data privacy concerns. Ethical AI governance is essential to ensure fairness and prevention of bias. Financial institutions must ensure that AI models are explainable, i.e., the ability to explain why certain results are produced. AI technology can also be misused to spread misinformation, potentially causing serious damage and disruption to DPI as well as other digital systems. They can also harm the reputation and operations of financial institutions, Das said.
He said international bodies such as the Organisation for Economic Co-operation and Development (OECD) have recognised this problem and outlined core principles governing AI, including inclusive development, respect for the rule of law and human rights, transparency and explainability, robustness and security, and accountability. He said the Hiroshima AI Process in December 2023 established a comprehensive policy framework that includes a set of guiding principles and a code of conduct, which is an important step towards a coordinated global approach to the responsible development of AI. Das also informed that India is the lead chair of the Global Partnership on AI (GPAI) for 2024. This multi-stakeholder initiative with 29 countries aims to bridge the gap between AI theory and practice by supporting cutting-edge research and advancing applied activities.
India’s Ministry of Electronics and Information Technology (MeitY) is taking key initiatives in this area, such as the establishment of the AI Research Analytics and Knowledge Dissemination Platform, which will focus on developing indigenous AI-enabled products and solutions to address India-specific challenges and complex real-life problems. Das said these initiatives underscore India’s commitment to not only capitalize on the potential of AI technology but also to ensure strong governance. “It is important to be proactive in leveraging the capabilities of new technologies, but at the same time it is also important to be fully conscious of the risks and challenges associated with it,” the RBI governor said.
He emphasized that the authenticity of the data being used in AI models, the possibility of biases, and concerns about data privacy must be carefully examined. Beyond understanding the risks posed by AI, financial institutions must clearly outline the liabilities and ensure a calibrated and responsible adoption. The RBI governor said that central banks and governments should promote the development of trustworthy AI while keeping in mind data privacy, explainability, accountability, and transparency.
