Navigating the AI Frontier in Banking: RBI's Warning

RBI Governor Shaktikanta Das highlighted the risks of excessive reliance on AI in banking. While AI and ML offer growth opportunities, they pose stability risks due to market concentration and vulnerabilities like cyberattacks. Das urged financial institutions to adopt robust risk mitigation strategies and not let technology overpower them.

RBI Governor Shaktikanta Das has raised concerns about the banking sector's heavy reliance on AI and machine learning, warning of potential stability risks if technology dominates the industry.

He highlighted that while AI opens new business avenues, it also introduces concentration risks, especially if a few tech providers monopolize the market. This could lead to systemic instability if failures occur.

Das emphasized the need for banks to implement solid risk management measures and stay vigilant against misinformation that can spread rapidly via social media and online banking platforms.

(With inputs from agencies.)