FinMin tells state-run banks to build AI capabilities to increase operational efficiency

For representational purpose.

The finance ministry has asked state-controlled banks to share resources and explore the possibility of using emerging technologies such as account aggregators and generative artificial intelligence (AI) to improve their operational efficiency and customer experience, a report has said.

In a meeting chaired by Union Finance Minister Nirmala Sitharaman to review the performance of public sector banks (PSBs) earlier this week, banks were told to explore partnership in human resource training and use technology to provide services to customers to cut cost, the Business Standard reported on July 8.

“Process automation happens across every digital back office, automation of branch facing roles etc,” a senior finance ministry official told the business daily.

Moneycontrol couldn't verify the report independently.

PSBs are now spending money separately for technology upgrade in artificial intelligence and machine learning, which is increasing the cost. Collaboration among lenders will slash costs as there is a need for shared infrastructure on cyber security areas, protection of personal information of users, the daily quoted the official as saying.

The government cautioned state-run banks on customer data protection while outsourcing critical services, including technical services.

In April, the Reserve Bank of India (RBI), in its final guidelines for outsourcing information technology by regulated entities in the financial sector, said that even after contracting out any work, their responsibility would not diminish, and their boards and senior would be ultimately responsible for outsourced work.

Banks have been asked to leverage analytics to widen the scope of early warning signals, which would help them identify and reach out to high-risk borrowers, the report mentioned.

On the business operations front, PSBs have been asked to embrace advanced risk management practices and focus on mitigating cyber security risks via technology upgrade.