Artificial Intelligence and Machine Learning (AI/ML) “is poised to revolutionise financial services in unprecedented ways,” Reserve Bank of India (RBI) governor Shaktikanta Das said on Wednesday (August 28, 2024) addressing the Global FinTech Fest, a three-day event in Mumbai.

“AI algorithms are already being deployed for fraud detection. ML models are being employed in credit scoring, leveraging predictive analytics to assess creditworthiness,” Mr. Das said, adding AI-driven virtual assistants were enhancing customer experiences by providing bespoke recommendations and resolving queries.

He said, “as AI/ML capabilities evolve, their application in regulatory compliance, investment advisory services, and algorithmic trading could redefine the financial landscape.“

Emphasizing that Internet of Things (IoT) represents another frontier of opportunities for the financial sector, he said IoT devices, embedded with sensors and connectivity capabilities, were reshaping the payments ecosystem by enabling seamless transactions through connected devices, like wearables and smart appliances. 

“Quantum computing holds great promise as a game-changing technology with profound implications for cryptography, financial modelling and risk management,” he said adding Cybersecurity has emerged as a critical pillar in safeguarding India’s digital financial ecosystem from a systemic stability perspective.

“As financial transactions increasingly migrate online, the threat landscape is expanding exponentially. Investing in state-of-the-art technologies such as AI-driven threat detection, analysis and mitigation, along with clear focus on improving human resource capabilities are necessary to bolster resilience of information systems,” Mr. Das added.

Over the next two decades, Fintechs would be instrumental in driving the progress in transition finance, climate finance and nature-based solutions, Mr. Das said.

“We have to put our heads together to achieve sustainable growth and environmental stewardship for future generations,” he added.