CIO Confluence sheds light on AI’s role in banking and need for tightened controls

• CBSL Deputy Governor J.P.R. Karunaratne labels cybersecurity as biggest threat to local financial institutions
• Calls for strengthening of data protection policies and solutions to rising red tape
• Opines 4.2 b people expected to use digital banking worldwide by 2026 
• Says 98 b global digital banking deposits anticipated in long-term
• Cites evolving customer experiences, elevated intelligence across services, AI-augmented core systems and human-centric organisations as global trends
• IBM Data and AI Pre-sales Engineering Leader Rohit Sood discusses creation of hyperpersonalisation in banking as a result of AI
• Red Hat Vice President and General Manager India and South Asia Marshal Correia emphasises its commitment to strengthening core values via AI
• BPC Banking Technologies Regional Business Solutions Director Irfan Ahmed says security is important to building customer trust

By Janani Kandaramage

Pioneering the next frontier of innovation and economic resilience, the Chief Information Officer (CIO) Confluence 2025 organised by the Banks’ Chief Information Officer’s Forum (BCIOF) was held recently at Shangri-La, Colombo. 

The event featured insightful presentations from esteemed international and national speakers on emerging trends, complemented by valuable knowledge exchanges via networking opportunities. As a premier event for banking and technology leaders in Sri Lanka, this year’s gathering explores how transformative technologies such as-AI, blockchain, and quantum computing are reshaping banking in the next decade and beyond – while exploring strategies for innovation, resilience and trust in a dynamic financial ecosystem.

Addressing the gathering as Chief Guest, Central Bank of Sri Lanka (CBSL) Deputy Governor J.P.R. Karunaratne labelled the vast gathering a testament to the local banking sector’s commitment to embracing and navigating threats to the current financial ecosystem. He described managing cybersecurity as the biggest challenge of local financial institutions, emphasising the need for strengthened safeguards to customer data. 

“Potential measures include implementing advanced encryption protocols for data storage and transmission can further safeguard customer information. Others include regular security audits, multi-factor authentication, and continuous staff training on data protection best practices and emerging threats to bolster internal security controls,” he commented. “Existing data protection laws such as the Personal Data Protection Act (PDPA) enacted in March 2022 Financial Consumer Protection Regulations No. 1 of 2023 (FCPR) mandate financial institutions to uphold stringent data protection measures and oversee compliance.”

The Deputy Governor added that way forward is to ensuring these measures are enforced responsibly while respecting data privacy and ethical considerations. He believes that enhancing robust data protection protocols further not only safeguards customer information but also upholds the ethical duty of financial institutions to protect individual privacy, fostering trust and aligning with societal expectations. Although he expressed optimism over overcoming these threats, he noted an unprecedented rise in red tape in recent months, urging banks to increasingly adopt red tape solutions.

“Steps such as the CBSL’s development of a bank recapitalisation strategy in 2024 facilitates a restructuring process for nine large domestic banks, better positioning the banking system to operate efficiently, reducing internal red tape. But this is not enough. We need more red tape solutions to overcome both internal and external threats,” he opined.

Delivering the keynote address on the future trajectory of banking and technology, Infosys Finacle former CEO Sanat Rao said: “Modernising data to become platforms over product companies is important. This is because technological growth today has led it into the hands of those who don’t understand its power or usage. Therefore, a platform-based model is crucial to enhancing networks and value creation. We must optimise the present to reinvent the future, especially in the wake of software ranging from GenAI to ChatGPT.”

Highlighting the future trends in digital banking, 4.2 billion people are expected to use digital banking worldwide by 2026 while there will be 98 billion global digital banking deposits in the long-term. He emphasised five common global trends in this age of digitisation including evolving customer experience, elevated intelligence across services, AI-augmented core systems, and human-centric organisations. 

“For instance, GenAI will enable customer experience to be tailored and to the point while utilising the role of the Chief Experience Officer to act as the important glue across products and channels. Additionally, automation encourages efficiency, accessibility, and enhanced personalisation as databases record and keep track of customer details,” he explained. 

In navigating this dynamic environment, he suggested reimagining corporate structures driven by AI but centred around humans and embedding AI in software tools to ensure regulatory standards. 

IBM Data and AI Pre-sales Engineering Leader Rohit Sood reiterated Rao’s words on personalisation in banking as a result of AI. He discussed how AI creates digital replicas of customers’ financial profiles, enabling banks to tailor services and products to individual needs. He also spoke about how this leads to a dynamic credit scoring system as AI driven models assess creditworthiness in real-time, offering personalised loan options and interest rates based on current financial behaviour. 

Speaking about the role of quantum computing in shaping the future of banking-quantum algorithms are anticipated to accelerate payment processing, portfolio optimisation, and credit scoring as quantum computation assesses the fraud risk from billions of transactions. 

Red Hat India, South Asia Vice President and General Manager Marshal Correia spoke of Red Hat’s efforts at integrating technology to financial services. These include core banking modernisation, regulations concerned with new risks, in-place upgrades and extended lifecycle support to financial systems. He asserted that these steps would strengthen the core values of Red Hat, such as financial inclusion and effective cash management.

BPC Banking Technologies Regional Business Solutions Director Irfan Ahmed emphasised the role of security in building trust via consumer awareness, leveraging AI to detect and prevent fraudulent activity in real-time, and advanced authentication methods. He expressed optimism for the future of Sri Lanka if the country treads down the path aspired by the CBSL in the coming years.

Established in 2012 under the Sri Lanka Banks’ Association (SLBA), BCIOF serves as a strategic platform for C-level decision-makers from commercial, state, and foreign banks, fostering collaboration and technological innovation.

- Pix by Ruwan Walpola