AI In Financial Sector: Reserve Bank Deputy Governor Swaminathan J has said that if artificial intelligence (AI) is adopted without safeguards, it can further expose the existing weaknesses in the system. Besides, he said that such adoptions could create new problems in the financial sector.
Swaminathan J said that AI is reshaping how financial institutions serve customers, process documents, assess credit, monitor risks, and strengthen oversight. “The speed of that change is remarkable.”
"The real question before us is not whether finance will become more intelligent but whether it will remain fair, accountable, inclusive, and humane," Swaminathan J said.
AI In Financial Sector: AI Importance
He said that AI-enabled systems can make customer interaction simpler and more responsive. Additionally, AI can also help improve credit delivery.
Other than this, AI can play a significant role in detecting fraud and managing risk. “If AI is adopted without adequate safeguards, it can amplify existing weaknesses and create entirely new forms of harm,” Swaminathan J said.
AI In Financial Sector: Balanced Approach
"Therefore, the conversation about AI in finance must be balanced. We should neither be taken in by technological hype nor retreat into being defensive," Swaminathan added.
Swaminathan J also sought to highlight five major concerns: bias and unfair outcomes; opacity; data privacy and misuse; model risk; and cyber risk.
Swaminathan J made the comments while delivering the CUB Shri V Narayanan Memorial Lecture at the SASTRA University, Thanjavur.
V Narayanan is remembered as a transformational leader of City Union Bank, founded in 1904 in Kumbakonam. Under his leadership, City Union Bank grew from a largely regional institution into one with a wider national presence.
