Author: Wahid Pessarlay, COINGEEK; Translation: Song Xue, Blocking
The Reserve Bank of India (RBI) has urged local financial institutions to accelerate the use of artificial intelligence (AI) and blockchain technology to improve customer service.
The latest call from the RBI came during a meeting of the boards of directors of commercial banks, whose theme was to reduce systemic risks in the field. In his speech to the attendees, RBI Deputy Governor Mahesh Kumar Jain revealed that using AI and blockchain could provide solutions to a range of challenges facing payments in India.
His speech was centered around the need for commercial banks to strengthen existing corporate governance structures to remain resilient in the face of growing risks. Jain pointed out that new technologies such as digital currencies posed significant threats to the financial system.
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The Reserve Bank of India felt the effects of the FTX crash in 2022, and the 116-year-old SVC Co-operative Bank Limited was forced to issue a statement distancing itself from US-based Silicon Valley Bank (SVB).
Jain identified other challenges affecting the Indian banking sector, including cybersecurity threats, disruption from technological innovation, and “evolving customer expectations.” The deputy governor revealed in his speech that Indian banks can stay ahead by actively using AI and blockchain.
Despite Jain’s call, integrating blockchain into its products remains a daunting task for the Indian banking industry. Plans for banks to establish a blockchain-based universal settlement platform were scrapped after Finance Minister Nirmala Sitharaman confirmed the government’s opposition to the technology.
In a written response to legislators, Sitharaman explained that only a small percentage of Indian banks expressed interest in using blockchain, making launching a national blockchain technology platform a futile exercise.
Indian banks may use regenerative AI technology to perform predictive analysis on their customer base while developing personalized services tailored to individual users.
Other industries using blockchain technology
Experts point out that India believes its financial sector is too fragile to allow disruptive technologies such as blockchain and AI to be tested. Perhaps an unquestionable example is the RBI’s decision to abandon a universal blockchain platform in its central bank digital currency (CBDC) pilot.
However, the adoption rate of blockchain in other industries has been impressive – with preparations being made to increase the adoption rate to over 50%. Multiple use cases of blockchain technology have been deployed in the security, education, healthcare, and real estate sectors, while local governments use the technology to improve administrative processes.