Bankers have to be aware of the legal risk, cyber risk and the impact artificial intelligence and machine learning (AIML) will have on the banking system as these new technologies take shape for a larger role in public like Reserve Bank of India (RBI) deputy governor T Rabi Sankar said.
Sankar who oversees the department of fintech, currency management and department of payment and settlement systems at the RBI among others said banks as risk managers have to be aware of the changes AIML will bring even as they figure out the implementation of these technologies in day to day operations.
He suggested that it would be better if the training of people and upgrade of systems can be co-ordinated between banks by industry bodies like the Indian Banks’ Association (IBA) because the nature of AIML technology is very different from before.
“The laws of today have not caught up with the technological progress, they have to move more rapidly. We will need people who understand technology, banking and law. There is also a data protection law that is coming in India. Internally I have told people in RBI that we should not wait to make changes after it comes into force because by then we may be already in violation of the law,” Sankar said.
He gave the example of the ‘I love you’ computer bug developed in Philippines which impacted 10% of the internet in 2000, but the makers of the bug could not be punished because the laws at that time were not equipped to deal with such cases.
Sankar said that though there is a fear of job losses historically technological innovations have led to new kind of jobs. “Someone will have to create money and it has to be banks. Unless we adapt and develop our skills the changes could overtake us. How many skills will be finally taken up by AI we will never know,” he said.
Sankar said cyber risk will become more prominent as banks become more dependent on technology. “Cyber security will have to be looked at more closely because its not a question of if but a question of when a system will be breached. We have to be open to what is happening in the world,” he said.