Web3 For Fraud Detection: Banks need future technology for protection

Indian finance minister, Nirmala Sitharaman, has pushed banks to identify fraud and develop early warning systems by utilizing cutting-edge capabilities like Web 3.0 and artificial intelligence (AI).

Integrating native artificial intelligence into Web 3 systems is a logical evolution. Every software sector is being impacted by AI, so Web 3 shouldn't be an exception. However, there are basic, technological barriers to the adoption of AI technology in Web 3 stacks.

Marc Andreessen, a titan of venture capital, coined the phrase "Software is devouring the world" in 2011 to sum up the idea that businesses existing in the physical world were shifting to a digital one and that software would be their pillars.

Nirmala Sitharaman, the minister of finance, has urged banks to use cutting-edge tools like Web 3.0 and artificial intelligence (AI) to detect fraud and create early warning systems. "The IBA (Indian Banks' Association) should coordinate the use of Web3, data analysis, artificial intelligence, and deep data dives. Utilizing AI should be a top priority for banks right away, particularly in fraud detection and producing early warning indications of something going wrong, according to Sitharaman. She added that banks might use Web3 AI for a variety of purposes, such as detecting fraud, monitoring misplaced funds, and spotting anomalous transactions.

FM Sitharaman made the statements while addressing the 75th annual general meeting (AGM) of the IBA in Mumbai. The Minister praised the government's account aggregator architecture and asked for the implementation of more reforms to enable interaction between private and public sector banks.

Are your systems interconnected? If these bridges between banks are not established, there will be a significant potential loss. The IBA should create plans to ensure that all systems in all banks—private and public—talk to one another for the benefit of the client. When such solutions are implemented with the client's cooperation, the customer benefits, said Sitharaman. She added that there was a need to integrate these rural banks into the account aggregator structure and that Regional Rural Banks (RRBs) required greater help for the digital push.

Sitharaman talked on a variety of subjects at the occasion, including the necessity for banks to implement robust cyber security measures. Are you all prepared with sufficient firewalls, she asked. Are your systems secure from hacking and other "Black Swan" events that could bring them down? She urged the banks to digitize their operations and train their staff to be tech aware. "You are available for everyone if you can maintain yourselves available for phone banking and digital systems," FM continued. Sanjay Malhotra, the financial services secretary, echoed the attitude and urged banks to use technology, saying those that 'lose out' may even 'perish' as a result.

Indian banks have a reputation for being a bulwark against change. Indian banking has advanced significantly over the past few years, moving away from the cliché of the slothful bank employee. The rapid adoption of online services by banks, which prevented clients from visiting branches, was fueled by the expanding internet and smartphone markets. As the pandemic engulfed the nation and the world, digital banking adoption increased abruptly as more and more people chose to access services from the comfort of their homes rather than visiting a physical branch. The simplicity of internet services only accelerated the take up of the service.