Mumbai, June 20: Reserve Bank of India (RBI) Governor Shaktikanta Das on Thursday stressed the importance of banks and non-banking financial companies adopting advanced and emerging technologies such as artificial intelligence (AI) and machine learning (ML) to prevent financial frauds.
“Integrating advanced and emerging technologies like AI, ML and big data analytics into organizational functioning can transform the way financial institutions operate. AI and ML can enhance predictive analytics, helping banks and non-banking financial institutions to better identify potential risks and trends. These technologies can improve fraud detection by recognising anomalous patterns and transactions in real time, thus protecting financial institutions and their customers from financial crimes and frauds,” the RBI Governor said at the Global Conference on Financial Resilience here. RBI MPC Meeting 2024: Reserve Bank of India Governor Shaktikanta Das announces monetary policy, repo rate remains unchanged at 6.5%.
RBI Governor speaks at press conference at Global Conference on Financial Resilience
“As the financial sector becomes increasingly digitalized, the adoption of advanced technologies can significantly enhance the ability of banks and non-banking financial institutions to withstand and respond to various risks. However, it must be ensured that these technologies are secure, reliable and aligned with the overall strategic objectives of financial institutions,” Das said.
The RBI Governor said automating routine tasks would improve efficiency, reduce human error and free up resources for more strategic activities. Robotic process automation (RPA) can handle high-volume, repetitive tasks like data entry and transaction processing faster and more accurately than humans, he added. Reserve Bank of India Governor Shaktikanta Das calls on Finance Minister Nirmala Sitharaman ahead of the Monetary Policy Committee meeting.
Das also noted that as financial institutions become more reliant on advanced technologies to enhance their operations, they may become more dependent on third-party vendors and service providers. Failure by vendors to deliver services reliably may have a direct impact on the regulated entity's operations and customer service. Hence, thorough due diligence will be required before selecting third-party vendors, he added.
The RBI Governor also noted that while pursuing business growth is important for banks and non-banking financial companies, it should never be done at the expense of incurring unacceptable risks.
He added that strong risk mitigation measures are essential to ensure the long-term success and resilience of regulated firms and the financial system as a whole.
Das also stressed the importance of ethics in the governance of financial institutions, which includes complying with laws and regulations in both letter and spirit, pursuing sustainable business practices, and avoiding imprudent profit-making.
(The above story first appeared on LatestLY on Jun 20, 2024 03:14 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).
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