Stating that the future of finance is going to be driven more by digitisation, Finance Minister Nirmala Sitharaman on Tuesday said there is a big role for artificial intelligence in fintech areas such as detecting crime, fraud detection, and quantifying risk. Referring to the future of finance as VUCA — volatile, uncertain, complex and totally ambiguous, she also said that one has to think within the available parameters and “be ready to prevent any black swan event”.
“If VUCA is what it’s going to be for the future, future of finance, therefore is going to be even more VUCA. Very difficult for any one of us to put a finger on any one aspect of finance and say this is how it’s going to be but yet we will all have to think within the available parameters, plan and also be ready to prevent any black swan event. So when you are talking about the future, particularly the future of finance, there is definitely a sense of urgency, with which we need to plan for something which is going to be highly volatile and also be more influenced by extraneous factors for each one of us,” Sitharaman said while speaking at the Ficci Leads 2022 conference.
It is not yet time to forget Covid or forget uncertainties, she said, adding to that extent “we still have to be cautious without sounding cynical”.
The government is working towards implementing a centralised know-your-customer (KYC) to be used for undertaking financial transactions across institutions, she said. She also stated that developed countries have not fulfilled their $100 billion commitment to developing nations to fight climate change and stressed the need for more global cooperation and less talk.
“There is a central repository which takes care of central KYC. We are also now working in such a way that once you have given your KYC, it can be applicable at various institutions at various times for various requirements that you may have. And you may not have to do it each time even if the businesses are slightly different that you’re engaged in,” she said.
Sitharaman said the government and regulators are working to bring it all together, which will bring about ease of doing business. The issue of a common know your customer (KYC) process for banking, insurance and capital markets was discussed at a meeting of financial sector regulators and the finance minister last week.
She said the value of UPI transactions has crossed Rs 10.62 lakh crore in July through 6.28 billion transactions. In the last fiscal ended March 2022, UPI processed more than 46 billion transactions amounting to over Rs 84.17 lakh crore.
On the issue of climate change, she said India has fulfilled all its commitments made at the COP21 climate change conference using its own funds and the country is gradually moving towards adopting renewable energy. The minister said already five years have passed since the developed countries committed to jointly mobilise $100 billion per year to address the needs of the developing nations. “($)100 billion is still on. Five years or six years have gone by. We’ve not seen anything of that, not just we, no other country has seen it. Island nations are drowning. Coastal areas are getting eroded. Unusual events of rain, which should happen over three or four months, pours on a single day. These are not things which (are) isolated in some part of the world. It’s across the board,” she said.
Sitharaman said all countries would have to do something towards mitigating the impact of climate change, but there is no transfer of technology or funds happening from developed nations. “But no transfer of technology will happen, no monies will be pulled in to collectively help countries. But yet every one of us wants the ambition to be even further, higher and higher. It’s just not going to be possible for many countries.”
“We clearly are showing progress towards renewable, we are moving towards solar.. But that is the scale at which we are doing it because we commit ourselves and we believe in it. So the one thing which, if I were to ask, we need (is) more global cooperation, probably less talk,” she said.