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AI will revolutionise risk management with custom-fit regulation: Buch

“Artificial intelligence will allow us to take regulation to a level where risk management will almost be custom-fit for an entity. If that entity has managed its risk well, then the level of regulation will be automatically low. AI will give us the ability to move from risk-based supervision to risk-based regulation to segmented regulation to a granular-level regulation, which will make life a lot easier for all regulated entities,” said Madhabi Puri Buch, Chairperson of Securities and Exchange Board of India (SEBI), in her keynote address at the Global Fintech Fest 2023 (GFF 2023), in Mumbai on Tuesday.

Buch elaborated on the importance of building resilient financial systems and leveraging the potential of fintech to drive economic growth. Buch said, “Incumbent entities are undergoing a massive transformation and are morphing more and more into fintech companies in the way they look, feel and speak. Today, even our stock exchanges are fintech companies. Some of the mutual fund platforms are nothing but fintechs in terms of substance. These incumbents have a huge advantage because of the cash flows of their traditional businesses, manpower and stability, so when they apply the principles of modern technology and modern design thinking, they have actually morphed into rocket ships. This transformation is ongoing.”

Buch further said, “India is the first jurisdiction in the world that has moved to the T+1 settlement. We are talking about one-hour settlements and even that is a stepping stone to instantaneous settlement. You will see all this in a reasonably short period of time. Something that is traditional is now going to morph into something very modern and contemporary. It is only a matter of time before things can be done in minutes. This is true for both the market and the regulator.”

Hosted by Srinivas Jain, Executive Director and Head of Strategy, SBI Mutual Fund, and Advisory Board Member, GFF 2023, the session discussed market regulations at length.

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