New Delhi. Concerned over the excessive reliance on artificial intelligence and machine learning (AI-ML) in the banking sector, Reserve Bank of India (RBI) Governor Shaktikanta Das on Monday said that lenders should take advantage of the strengths of big technology companies (BigTech).
He said that the latest technological advancements like AI and ML have opened new avenues of business and profit expansion for financial institutions. However, at the same time he said that these technologies also pose risks to financial stability. Addressing a conference organized by the central bank here, he said, “Heavy reliance on AI could lead to concentration risks, especially when the market is dominated by a small number of technology providers. This could increase systemic risk, as failure or disruption in these systems could spread throughout the financial sector, he said, adding that new vulnerabilities emerge with the increasing use of AI. This increases the risk of cyber attacks and data breaches.
Furthermore, the ambiguity of AI makes it difficult to audit or explain the decision-making algorithms. This may lead to unexpected results. He said, banks and other financial institutions should take adequate risk protection measures against all these risks. In the final analysis, banks should take advantage of AI and BigTech and not let BigTech take advantage of them. While the increasing digitalization of financial services has increased the efficiency of the financial sector around the world, it has also brought a number of challenges, With which central banks will have to deal.
Talking about the risks of digitalisation, the RBI Governor said that in the modern world with the deep presence of social media and widespread access to online banking with money transfers in seconds, rumors and misinformation can spread very fast and lead to cash crunch. may arise.