RBI urges banks to adopt AI & blockchain, emphaises on digital transformation
Indian central bank has advised the banks to embrace AI and blockchain for long-term growth and stability.
Highlights
- RBI's Deputy Governor spoke about risk management techniques for growth and stability
- He advised banks to employ innovative technologies to ensure sustainable growth
Recently, a conference was organised by India's central bank, the Reserve of Bank of India (RBI) for the directors of Indian banks, where the bank’s Deputy Governor, Mahesh Kumar Jain, spoke about risk management techniques for long-term growth and stability.
He urged that the country’s banking institutions to employ artificial intelligence (AI) and blockchain technologies to ensure sustainable growth.
Speaking at the conference, Jain highlighted the evolving risks faced by the banking sector, such as technological disruptions, cybersecurity threats, and changing customer expectations. He emphasised the need for strong corporate governance, governance structure, and risk management systems in the future. He further stated that banks, currently, are facing radical advances in the form of technological progress, rising consumer demands, as well as crypto-related risks.
Advice on adopting innovative technologies
There is a necessity for more exclusive innovations that may be helpful in dealing with the financial industry’s new and severe issues arises, states Jain. He advised Indian banks to prioritise digital transformation, invest in cyber security measures, and at the same time, strive towards enhancing customer experience.
In the words of the Deputy Governor, “To prepare for the future, Indian banks will need to focus on digital transformation, enhance customer experience, adopt innovative technologies such as AI and blockchain, invest in cybersecurity measures, look for opportunities to derive synergistic benefits through collaboration with other players as well as upskilling their workforce to meet the demands of the digital era.”
India's plans regarding ushering in the new era with CBDCs
The RBI launched CBDC (central bank digital currency) pilot on 1 November 2022 and began testing for offline functionality in March 2023. Recently, the central bank mentioned that the results of both the retail CBDC pilot as well as wholesale CBDC pilot, so far, have been satisfactory and in line with expectations.
Moreover, in March, the RBI signed an agreement with its counterpart in UAE to explore the interoperability of CBDCs and to collaborate on experiments for cross-border CBDCs.
