A White Paper brought out by the Institute for Development and Research in Banking Technology (IDRBT) in association with Microsoft India has stressed the need for banks to have a clear vision in terms of their Artificial Intelligence (AI) strategy.
While Banking, Financial Services and Insurance (BFSI) sector is increasingly adopting AI, addressing the key challenges has become critical, said the White Paper ‘AI in Banking: A Primer’ that was released by Saurabh Mishra, Joint Secretary, Department of Financial Services, Ministry of Finance, on Friday.
A release from IDRBT, which is an institute established by Reserve Bank of India, said the White Paper recommends a two-phase approach – pre-adoption and during adoption – for effective development and implementation of AI tools.
The pre-adoption stage would require familiarising the workforce with required skills and a careful ROI assessment. During the adoption stage, banks and financial institutions must focus on making data secure, provide proper training to employees and close the talent gap. It is also important to ensure AI algorithms are ethically designed to avoid bias and are compliant with regulations to ensure fairness, accountability and transparency and prevent incorrect decision-making.
On the AI strategy, the document said banks need to have a clear vision on what AI is to achieve, how they want to integrate it within their organisation; study feasibility and impact of investments and possible consequences on their internal dynamics. It called for investment in creation and storage of a large amounts of data to train the AI algorithms. Dividends yielded by AI are related to the quality and the quantity of the data recorded or stored.
Also, the White Paper wanted banks to educate the workforce on how AI will complement and enhance their work and not replace them. It also introduces an AI maturity assessment model developed by Microsoft.