AI safety must keep pace with adoption in financial sector: CEA Nageswaran

The Chief Economic Adviser said AI can improve credit assessment and risk detection in fintech, but firms must prioritise safety and security as adoption accelerates

India needs to be proactive on the safety and security of artificial intelligence (AI) in the financial sector as firms increasingly adopt the technology, Chief Economic Adviser (CEA) V Anantha Nageswaran said on Friday. He cautioned that the sector may not have the luxury of waiting for risks to materialise before responding.

 

Speaking at ASSOCHAM’s India International Fintech Festival, Nageswaran said AI could significantly improve the fintech industry by enabling firms to assess creditworthiness more accurately and identify risks and financial stress at an earlier stage.

 

“Specifically speaking from the fintech perspective, of course AI is going to help various firms in the industry. Analyse the creditworthiness far better, flag risks and stress much earlier,” he said.

 

 

However, the CEA warned that recent instances of AI agents acting autonomously underscored the need to focus on the technology’s safety and security alongside its productivity potential.

 

“We don’t generally pay attention to risks that well until an after-day when it becomes a reality. So that is where our focus should be,” he said, adding that the financial sector could not afford to wait for risks to materialise before responding.

 

“I don’t think we will have the luxury of time, particularly in the financial sector, to be able to react later. We have to be very focused on the safety and security aspect of AI,” he said.

 

Nageswaran also cautioned against assessing the economic benefits of AI amid the current enthusiasm surrounding the technology. He said a clearer cost-benefit assessment would only be possible after the financial market bubble around AI deflates.

 

“Only when the current financial market bubble in AI deflates will we be able to do a proper cost-benefit analysis of AI,” he said.

 

He said there was currently “too much hype” around the potential of AI and called for greater attention to its risks even as businesses seek to capture productivity gains.

 

“Focus right now has to be on the safety and security dimension. With the temptation to take advantage of the potential productivity gains, we should not lose what we already have,” he said.