BFSI (Banking, Financial Services, and Insurance) institutions are urged to prioritize governance, trust, and explainability as foundational principles while scaling AI technology across customer journeys, fraud management, risk intelligence, and decision-making. This was highlighted by industry leaders at the ETCIO Annual Conclave 2026. As banks transition from experimentation to widespread adoption of AI, speakers emphasized that ambitious AI initiatives should be balanced with a strong focus on regulatory compliance, cyber resilience, and maintaining customer trust.
The session titled “Trust at Scale: How BFSI Leaders Are Balancing AI Ambition, Regulation, & Customer Confidence” was moderated by Gautam Srinivasan, Senior Journalist and Consulting Editor at ETCIO.
Mahesh Ramamoorthy, CIO of Yes Bank, noted that banks need to carefully calibrate AI deployments based on anticipated benefits, inherent risks, and governance requirements. He stressed that financial institutions cannot tolerate inaccuracies or opaque outcomes since customer trust is paramount to banking operations. “We are not a product company; we are in the business of driving specific outcomes for customers. We cannot afford hallucinations,” Ramamoorthy stated.
Ratan Kumar Kesh, Executive Director and COO of Bandhan Bank, echoed similar sentiments, cautioning that banks must ensure AI advances do not erode customer trust or brand integrity. He insisted that AI solutions should seamlessly integrate with both core and ancillary systems to achieve reliable and straightforward outcomes. “In banking, it is extremely important that we never lose customer trust,” Kesh remarked.
E. Ratan Kumar, Executive Director of the Central Bank of India, asserted that governance is evolving beyond mere compliance to become a competitive edge. He advocated for embedding accountability, transparency, compliance, and trust into the design of AI systems. “Governance is becoming a competitive advantage because it is the bedrock for accountability, transparency, trust, and compliance,” he emphasized.
Sarang Khewle, Deputy CTO (Digital) and Head of Digital Innovation at the State Bank of India, remarked that AI is enhancing trust by enabling the implementation of controls and compliance measures that were previously challenging to execute manually. “AI is rebuilding the trust factor rather than compromising it,” Khewle affirmed.
Binit Jha, Chief Digital Officer at IDBI Bank, highlighted the necessity for AI governance frameworks to evolve continually, as models may behave unpredictably depending on the context and data utilized. He pointed out that AI governance cannot remain static as systems advance.
Ritesh Varma, Head of Business Consulting and Insurance Practice at Newgen, cautioned that the application of AI in regulated sectors requires careful consideration, advising organizations to categorize use cases by their criticality and associated risks. He advocated for architectures that facilitate the transition of AI from “art to science” through robust governance and control.
Pankaj Gianani, FSS Leader for India and South Asia at IBM Consulting, stressed the importance of strong data foundations, simplified architectures, and widespread AI literacy in scaling AI in the BFSI sector. He noted that although many organizations are conducting AI experiments, only a select few are successfully implementing AI across various functions.
The panel collectively recommended that BFSI firms should initially focus on critical areas such as fraud risk management, operational risk management, customer service, onboarding, and product pricing, where stronger controls and quantifiable outcomes are achievable.
The session concluded with a consensus that the successful scaling of AI in the BFSI sector will depend more on institutional readiness than the sheer number of use cases. Banks that integrate governance, explainability, human oversight, data quality, and accountability into their AI systems will be better positioned to innovate without undermining customer confidence.
Published on May 25, 2026.
