AI can boost Digital Public Infra but poses challenges: RBI chief
Bengaluru, 26 August: AI’s integration into financial services offers enormous potential for consumers, banks, and regulators, but it also presents a number of risks. For example, managing large amounts of personal data raises privacy concerns, and there’s a chance that information could be misused to propagate false information. RBI Governor Shaktikanta Das made these remarks here on Monday. AI can boost Digital Public Infra but poses challenges: RBI chief
“Today, Artificial Intelligence (AI) is making forays in the financial sector in the form of services like chatbots, internal data processing for intelligent alerts, fraud risk management, credit modeling, and other processes,” Das said in his speech at the Global Conference on “Digital Public Infrastructure and Emerging Technologies.” By incorporating this state-of-the-art technology into a strong and accountable DPI (digital public infrastructure), there is a chance to further enhance the capabilities and effectiveness of DPI.
He drew attention to the fact that the G20 Task Force on DPI Report from India claims that a smooth integration of DPI and AI will usher in a new era of “Digital Public Intelligence.” For all parties involved, the integration of AI into financial services presents substantial prospects. AI gives clients faster, more relevant services as well as highly personalized products. Lenders and other financial institutions gain from improved risk and fraud management tools, faster processes, and lower compliance costs. The RBI Governor stated that improved regulatory enforcement and market stability will result from regulators having more oversight and real-time monitoring capabilities.
He added that processing enormous amounts of personal data raises data privacy concerns, but that these developments are not without significant hurdles. In order to guarantee impartiality and avoid prejudice, ethical AI governance is crucial. Financial organizations need to make sure AI models can explain why specific outcomes are obtained, or put another way, that they are explainable. Additionally, AI technology can be abused to disseminate false information, which might seriously harm DPIs and other digital systems. According to Das, they may also harm financial organizations’ operations and reputation.
He noted that international organizations like the Organisation for Economic Cooperation and Development (OECD) have acknowledged this issue and set forth fundamental AI principles, which include accountability, robustness and safety, transparency and explainability, inclusive growth, and respect for the rule of law and human rights. He said that the establishment of the Hiroshima AI Process Comprehensive Policy Framework in December 2023—which contains a code of conduct and a set of guiding principles—marks a critical step toward a coordinated worldwide strategy for the responsible development of AI.
Das further emphasized that, starting in 2024, India will serve as the Global Partnership on AI’s (GPAI) lead chair. With 29 participating countries, this multi-stakeholder effort seeks to advance applied activities and fund state-of-the-art research in order to close the gap between AI theory and reality.
The Ministry of Electronics and Information Technology (MeitY) in India has been leading significant efforts in this field. One such initiative is the establishment of the AI Research Analytics and Knowledge Dissemination Platform, which will concentrate on creating domestic AI-enabled products and solutions to address complex real-life issues and challenges unique to India. Das continued, “These initiatives demonstrate India’s commitment to ensuring strong governance while simultaneously leveraging the potentialities of AI technology.”
The governor of the RBI stated, “It is crucial to be proactive in utilizing the potential of new technologies, but at the same time, it is essential to be abundantly mindful of the associated risks and challenges.”
He emphasized the necessity for a thorough investigation of the veracity of the data being used in the AI models, the potential for biases, and data privacy issues.
Financial institutions should not only be aware of the risks posed by AI, but also explicitly state the liabilities and guarantee a measured and prudent implementation. The RBI Governor said, “Central banks and governments should support the development of trustworthy AI, keeping data privacy, explainability, accountability, and transparency at its core.”
