India: Financial institutions urged to leverage AI, blockchain for sustainable growth

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India’s central bank has urged local financial institutions to hasten the adoption of artificial intelligence (AI) and blockchain technology to improve customer service.

The latest calls by the Reserve Bank of India (RBI) came during a conference for executive directors of commercial banks under the theme of reducing systemic risks in the space. In a speech to attendees, RBI Deputy Governor Mahesh Kumar Jain revealed that leveraging AI and blockchain has the potential to provide solutions to a range of challenges facing payment in India.

His speech revolved around the need for commercial banks to bolster their existing corporate governance structures to remain resilient in the face of ever-increasing risks. Jain pointed out that new technologies like digital currencies pose significant threats to the financial system, given their propensity for contagion.

Indian banks felt the tremors of FTX’s 2022 collapse, while 116-year-old SVC Co-operative Bank Limited (SVC Bank) was forced to issue a statement distancing itself from the U.S.-based Silicon Valley Bank (SVB).

Jain identified other challenges militating against Indian banks, including cybersecurity threats, disruptions from technological innovation, and “evolving customer expectation.” The deputy governor disclosed in his speech that Indian banks could stay ahead of the curve through the proactive use of AI and blockchain.

Despite Jain’s calls, Indian commercial banks face the arduous task of integrating blockchain into their offerings. Previous plans by banks to set up a common blockchain-based settlement platform fell through after Finance Minister Nirmala Sitharaman confirmed the government’s stance against the technology.

In a written reply to legislators, Sitharaman explained that only a fraction of Indian banks had indicated an interest in using blockchain, making launching a national platform an exercise in futility. 

Indian banks may use regenerative AI technology to make predictive analyses for their customer base while developing personalized services tailored for individual users.

Other sectors warming up to blockchain

Experts have posited that India considers its finance sector too delicate to allow experimentation with disruptive technology like blockchain and AI. Perhaps, an unquestionable example is the RBI’s decision to ditch a common blockchain platform in its central bank digital currency (CBDC) pilots.

However, other sectors have been recording impressive adoption rates for blockchain and are poised to send adoption rates to over 50%. Multiple use cases for blockchain have been deployed in security, education, healthcare, and real estate, while municipal governments use the technology to improve administrative processes.

In order for artificial intelligence (AI) to work right within the law and thrive in the face of growing challenges, it needs to integrate an enterprise blockchain system that ensures data input quality and ownership—allowing it to keep data safe while also guaranteeing the immutability of data. Check out CoinGeek’s coverage on this emerging tech to learn more why Enterprise blockchain will be the backbone of AI.

Watch: India will be the biggest blockchain nation in 5 years: IPv6 Forum’s Latif Ladid