AI keyword usage has risen sizeably in banks: Patra – Digital Transformation News

Almost three-fourths of banks and several non-banking financial companies (NBFCs) have developed chatbots and virtual assistants, said Michael Patra, deputy governor, RBI. Delivering a keynote address at the SAARC Finance seminar, he said the usage of artificial intelligence (AI) related keywords in Indian banks has increased sizeably.“A survey conducted by the RBI at June-end 2023 revealed that almost three-fourths of Indian banks and several NBFCs have developed chatbots and virtual assistants. Increased collaboration of banks and NBFCs with fintechs has facilitated introduction of model-based lending,” he said at the seminar.He added that with the increasing use of AI, concerns arise about transparency, data biases, governance, privacy and the robustness of algorithms. Hence, central banks need to ensure that there are enough checks and balances in place.

“The RBI has emphasised that data used for training of models should be extensive, accurate and diverse to rule out any prejudices and that algorithms should be auditable,” he added.  Emerging technologies have unleashed complex products and business models with risks, of which users may not be fully aware. He said new risks include the proliferation of fraudulent apps, deepfakes, and mis-selling via dark patterns.He said that central bankers must closely monitor developments in quantum computing, which is expected to lead to a multi-fold increase in computational abilities.

There is a growing concern, however, about the vulnerability of existing cryptographic methods that secure our financial transactions as quantum computing can rapidly perform code-breaking calculations.

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