MUMBAI (Reuters) – The growing use of artificial intelligence and machine learning in financial services globally may pose risks to financial stability and warrants adequate risk mitigation practices on the part banks, the Reserve Bank of India governor said on Monday.
“Massive reliance on AI can lead to concentration risks, particularly when a small number of technology providers dominate the market,” Shaktikanta Das said at an event in New Delhi.
This could amplify systemic risks, as failures or disruptions in these systems could ripple across the entire financial sector, Das added.
Indian financial services providers are using AI to improve customer experience, reduce costs, manage risks and drive growth through chatbots and personalized banking services.
The growing use of AI introduces new vulnerabilities such as increased susceptibility to cyberattacks and data breaches, Das said.
The “opacity” of AI makes it difficult to audit and interpret the algorithms that drive lenders’ decisions and could potentially lead to “unforeseeable market consequences”, he warned.
Separately, Das said private credit markets have grown rapidly across the world with limited regulation, posing significant risks to financial stability, especially as these markets have not been subject to testing. resistance in the event of an economic slowdown.
(Reporting by Siddhi Nayak; editing by Eileen Soreng)