RBI Warns Banks Over Tech Concentration Risks
The Reserve Bank of India has warned that growing dependence on a small group of cloud, technology and artificial intelligence providers could create systemic risks for India’s financial sector, allowing a disruption at one vendor to affect multiple institutions simultaneously.
RBI Flags Common Technology Dependencies
RBI Deputy Governor Rohit Jain said banks and financial institutions are increasingly relying on a limited number of cloud providers, technology vendors and AI model providers.
Speaking at the Global Fintech Fest in Mumbai, Jain warned that overlapping infrastructure and datasets could turn a failure at one technology provider into a wider financial-system problem.
A cyberattack, technical breakdown or serious error affecting a common provider could potentially disrupt several banks and financial institutions at the same time.
AI and Emerging Technology Can Amplify Risks
Jain identified speed, concentration and opacity as three major concerns as emerging technologies become more deeply embedded in financial services.
Artificial intelligence, tokenisation, distributed technologies and quantum computing could make finance cheaper, faster and more accessible, but could also increase the speed and scale at which problems spread across interconnected financial systems.
The RBI stressed that technological innovation does not eliminate traditional financial and operational risks.
Banks Remain Responsible for Outsourced Technology
Jain cautioned financial institutions that outsourcing computing or technology functions does not transfer responsibility for their consequences.
Banks therefore need strong risk-management systems, contingency arrangements and greater resilience against failures involving third-party technology providers.
The warning comes as Indian banks rapidly increase their reliance on cloud infrastructure, digital platforms and AI-driven services.
The RBI has consistently supported financial innovation while emphasising that technological adoption must be accompanied by safeguards capable of protecting customers and preserving stability across the banking system.
