Mahesh Kumar Jain, the Deputy Governor of the Reserve Bank of India (RBI), highlighted the potential of blockchain technology and Artificial Intelligence (AI) to provide transformative solutions for the future of finance in a recent meeting with directors of Indian banks.
According to Jain, these emerging technologies could play an instrumental role in boosting India’s digital financial sector, presenting a need for integration into existing systems. Jain emphasised that this digital transformation could help improve customer experience, bolster cybersecurity measures, and present collaboration opportunities that could yield synergistic benefits.
Jain underscored the need for banks to invest in their workforce to meet the demands of the evolving digital landscape. This development surfaces when Indian crypto exchanges are reportedly in “survival mode”, anticipating a significant rise in the market within the next two to four years, according to a recent report by Coindesk.
Modernise Indian Banking Industry with Advanced Technologies
The RBI deputy governor urged the Indian banking sector to focus on risk management, regulatory compliance, and sustainability solutions to ensure their resilience in the ever-changing financial ecosystem. With this move, the RBI is signalling its readiness to usher in a new era of banking that leverages the potential of AI and blockchain technologies.
Risk management refers to identifying, assessing, and prioritising risks and coordinating resources to minimise potential adverse impacts. In digital finance, these risks could range from cybersecurity threats to financial volatility.
Regulatory compliance is another area highlighted by Jain. With the rapid development of technology, laws and regulations must be updated to reflect the new realities. Banks must ensure that their operations comply with all relevant laws and regulations to avoid legal complications The RBI deputy governor’s emphasis on regulatory compliance indicates an understanding of the need for a legal framework that keeps pace with technological advancements.
The final pillar of Jain’s focus is sustainability. In the context of banking, this term may refer to the long-term viability of banking operations. With the incorporation of AI and blockchain technologies, banks need to ensure that these changes are beneficial in the short term and sustainable in the long run. With Jain’s urging to focus on these three critical areas, it is evident that the RBI is preparing to lead the Indian banking sector into a new era. By leveraging the potential of AI and blockchain technologies, the RBI is set to revolutionise banking, offering improved security, efficiency, and customer experience. The end goal is a more robust and resilient financial ecosystem that can adapt and thrive in the face of the rapid changes of the digital era.