Reserve Bank of India (RBI) Governor Shaktikanta Das on Wednesday said that central banks, governments as well as people in the financial sector should facilitate the development of ‘trustworthy AI’ keeping in mind data privacy concerns and other elements. Addressing the ‘Global Fintech Fest’, Das said that the integration of cutting-edge technologies definitely brings transformational progress in various aspects of our lives. He said, “Artificial Intelligence and Machine Learning (AI/ML) are set to revolutionize financial services in an unprecedented way. AI algorithms are already being deployed to detect fraud. Machine learning models are increasingly being used in credit scores. Predictive analytics is being leveraged to assess loan eligibility and expand access to credit.” Understand the risks posed by AI

Das said that as AI and ML capabilities continue to develop, their potential applications in regulatory compliance, investment advisory services and algorithmic trading are expected to further redefine the financial landscape. Similarly, he said, “We should also fully understand the risks posed by AI and facilitate its adoption in a balanced and responsible manner. Financial sector people, central banks and governments should facilitate the development of trustworthy AI, keeping in mind concerns related to data privacy, interpretation, accountability and transparency.”

Two-three SROs will be enough

Shaktikanta Das said that the central bank will approve at least two industry bodies to operate as self-regulatory organizations (SROs) for the financial-technology (fintech) sector. Das said that the Reserve Bank has approved the Fintech Association for Consumer Empowerment (FACE) to work as an SRO as it meets all the requirements. He said two other organisations that had applied for SRO were also being considered. “Three applications have come. We are looking into many. I think probably two-three SROs should be enough at this point of time,” Das told reporters while attending the ‘Global Fintech Fest 2024’. He said the three bodies had applied for SRO licences at different times and the central bank was considering all the applications.