The Reserve bank of India set up a committee to develop a Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREE-AI) in Financial Sector
- The 8 member committee is a headed by Dr. Pushpak Bhattacharyya.
- It will recommend a framework assessing the current level of adoption of AI in financial services, identifying potential risks associated with AI etc.
Benefits AI in Financial Services
- Operational Efficiency: AI can automate repetitive & time-consuming tasks, allowing financial institutions to process large amounts of data faster & accurately. E.g. loan application processing.
- Enhanced Decision Making: AI enables more sophisticated financial decision-making through predictive analytics that forecast market trends. E.g. Algorithmic Trading
- Customer Relationship: Financial institutions leverage AI to improve customer interactions by Implementing 24/7 AI-powered chatbots & virtual assistants.
- Improved Risk Management: AI is used to prevent fraud before it happens as opposed to the traditional reactive approach to fraud detection.
Concerns
- Embedded Bias: AI model can reproduce/ amplify biases & discriminatory patterns that were mirrored in the data used to train the model which can lead to financial exclusion.
- Data Privacy and Security: Potential breaches of personal data protection regulations.
- Other: Inconsistent AI responses, increased exposure to cyber-attacks etc.
