Can AI unlock better services for India's underserved bankers?

Artificial Intelligence (AI) has the potential to help banks better understand and meet the needs of their account holders, according to Ganesh Kumar, Independent Director at IDFC First Bank. Speaking at the BSFI Summit organised by Dhanam Business Media at the Le Meridian Convention Centre in Kochi, Kumar explained that while India has a large number of bank account holders, many of them do not benefit from full financial services. 

AI to customise banking services

Mr Kumar highlighted that many bank accounts, especially those linked to government schemes, are mainly used for withdrawals, leaving the account holders underserved. He stressed that if banks are to provide more meaningful services, such as loans, AI should be used to better understand customer needs.

“Banks should use AI to recognise their limitations and possibilities, especially in sectors like agriculture, to offer more relevant and timely financial services,” Mr Kumar said. 

For example, AI could help banks identify if a farmer’s crop has been damaged and what type of loan they may need in response. 

AI can prevent fraud, but customers must be vigilant  

Mr Kumar also discussed the role of AI in preventing financial fraud, a growing concern with the rise of digital banking. While AI is increasingly used by fraudsters to siphon money from accounts, he pointed out that many banks are not yet using AI effectively to stop these activities. He believes that banks should develop systems to help customers protect their own financial data, particularly as the number of UPI transactions continues to grow, increasing the risk of personal data breaches.

“Account holders should not see fraud prevention as the sole responsibility of banks. Clients also need to explore how they can use AI tools to safeguard their financial information,” Kumar added.

Common phone number to prevent fraud  

In addition to AI, Gopalakrishnan, a participant at the event, spoke about the need for a common phone number to be used by all banks for customer communication. He said that the proposal, which had been discussed years ago, could help reduce confusion and fraud. Currently, customers receive messages from multiple numbers, which can confuse them and be exploited by fraudsters. A common number would make it easier for customers to identify legitimate communications from their bank, he argued.

Challenges of AI in banking  

While AI has great potential, it also brings challenges, particularly the risk of misinformation. Kumar pointed out that AI tools can sometimes provide incorrect information, which could affect banking decisions. However, if banks manage customer data carefully and use AI properly, they could significantly enhance the range of services they provide to customers.

“Banks can offer more financial services using AI, but it’s crucial to ensure that customer data is stored correctly and used responsibly,” he concluded.