Mumbai, June 20 (SocialNews.XYZ) RBI Governor Shaktikanta Das on Thursday underlined the importance for banks and NBFCs to adopt advanced and emerging technologies such as artificial intelligence (AI), and machine learning (ML) to prevent financial fraud.
Addressing the Global Conference on Financial Resilience here, the RBI Governor said, "Integrating advanced and emerging technologies such as AI, ML and big data analytics in organisational functioning can transform the way financial institutions operate. AI and ML can enhance predictive analytics and enable banks and NBFCs to identify potential risks and trends more accurately. These technologies can improve fraud detection by recognising unusual patterns and transactions in real time. Thus, they can protect the institutions and their customers from financial crimes and frauds."
"As the financial sector gets increasingly digitised, adoption of advanced technologies can significantly strengthen the ability of banks and NBFCs to withstand and respond to various risks. It has to be, however, ensured that these technologies are secure, reliable and aligned with the institution's overall strategic goals," Das said.
He observed that operational efficiency can be improved through the automation of routine tasks, which reduces human error and frees up resources for more strategic activities. Robotic process automation (RPA) can handle high-volume and repetitive tasks, such as data entry and transaction processing, more quickly and accurately than humans, the RBI Governor added.
Das also pointed out that as financial institutions increasingly rely on advanced technologies to enhance their operations, the dependence on third-party vendors and service providers may increase. A vendor's inability to deliver services reliably can directly impact the regulated entity's operations and customer service. Therefore, thorough due diligence becomes necessary before selecting third-party vendors, he added.
The RBI Governor also observed that while the pursuit of business growth is important for banks and NBFCs, it should never come at the expense of taking on unacceptable risks.
Robust risk mitigants are essential for ensuring the long-term success and resilience of a regulated entity as well as the overall financial system, he added.
Das also highlighted the importance of ethics in the governance of financial institutions which involves compliance with laws and regulations, both in letter and spirit; pursuit of sustainable business practices; and avoidance of mindless pursuit of bottom lines.
Source: IANS
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