Fostering Trust in AI Driven Banking in India: A Critical Analysis of the Regulatory Framework

The banking sector is undergoing a significant paradigm shift due to the integration of artificial intelligence. AI allows financial companies to improve user experiences, optimize service efficiency, and decrease dependence on human errors. However, the integration of AI in the financial sector faces various challenges, including regulatory compliance obstacles, resistance to change, and a mismatch between customer needs and institutional responses, which leads to lack of building trust in Digital Banking economy and imposes significant roadblocks in the growth of Indian banking industry. This research paper examines the various issues of implementation and building trust among consumers of AI in the banking sector, and addressing new challenges related to banking laws and regulations in India further, it also aims to propose effective strategies to enhance the efficiency of the banking sector and building the trust among consumers in digital banking system.