Zerodha's Nithin Kamath warns banks of a big upcoming problem!

Nithin Kamath, the co-Founder and CEO of Zerodha, has expressed concerns over the rise of generative Artificial Intelligence (AI) technology and deepfakes, stating that they pose a significant risk to the financial services industry. The rise of Zerodha and other brokerages was also propelled due to paperless online onboarding system including KYC. However, with the rise of deepfakes and AI, the entire online onboarding system may start faltering. 

“The tipping point for Indian financial services businesses was when onboarding became completely digital, thanks to Aadhaar, etc. For businesses onboarding a new customer, an important aspect is ensuring that the documents and the person opening the account are real,” Kamath said.

He highlighted that currently, the process involves fetching the ID or address proof data from the source using Digilocker or Aadhaar, and matching the face from this ID proof with the person opening the account through a webcam. There are several checks in place to verify liveliness and authenticity.

However, Kamath warns, “As the deepfakes improve, I think it will only become harder over time to validate if the person on the other side is real or AI-generated. This problem will be bigger for banks that have more stringent regulatory requirements during onboarding.”

He also highlighted the potential impact on regulations and the industry’s growth, “It will be interesting to see how the regulations around this evolve. Going back to the physical way of opening accounts will bring the growth of the entire sector to an abrupt stop.”

The rise of AI technology and deepfakes pose a large risk to the financial services industry.

The tipping point for Indian financial services businesses was when onboarding became completely digital, thanks to Aadhaar, etc. For businesses onboarding a new customer, an important… pic.twitter.com/DI9Z1Q3jxY

— Nithin Kamath (@Nithin0dha) December 13, 2023

The Indian government has taken cognisance of the matter of deepfakes but the new laws and policies may take time and multiple attempts to curb the above-mentioned issues. Meanwhile netizens can take up the responsibility to fine comb the media they consume to look for deepfakes.

Here are some tips to identify deepfake videos:
1. Check for inconsistencies: Deepfakes may have inconsistencies in lighting or shadows.
2. Look for distortions: There may be distortions in the background or strange movements.
3. Observe facial movements: Deepfakes often struggle to accurately replicate natural facial movements, especially around the eyes and mouth.
4. Listen to the audio: The voice in deepfakes may sound synthetic or not match the person’s lip movements.
5. Use technology: There are several AI-based tools available that can help detect deepfakes.
6. Verify the source: Always check the credibility of the source before believing any video content.

Also read: Zerodha's Kamath brothers bagged a salary of Rs 72 crore each in FY23: Report

Also read: More retail participation likely if corporate bonds' face value reduced to Rs 10,000, says Zerodha's Nithin Kamath