GFF 2026: ‘Know Your Agent’ needed as AI enters banking; 99% accuracy is not enough: SBI Chairman C.S. Setty

State Bank of India (SBI) Chairman C.S. Setty has called for a new framework to identify and authenticate artificial intelligence agents as banks move towards autonomous systems, saying the financial sector may increasingly need to move from “Know Your Customer” to “Know Your Agent”.

Speaking at the Global Fintech Fest 2026 in Mumbai, Setty said the transition from AI being used as a tool to technology capable of acting independently on behalf of customers would fundamentally change the risk landscape for banks. “The moment AI moves from recommendation to execution, accountability becomes even more important,” he said.

AI moves from assistance to execution

Setty said agentic AI could operate across the financial lifecycle, including fraud and new-account detection, KYC and anti-money laundering processes, loan appraisal and underwriting, reconciliation and customer lifecycle management.

SBI, he said, has already been an early adopter of AI and machine learning, using the technology in customer-service chatbots, pre-approved personal lending, credit assessment, cash-flow-based lending, early-warning systems, fraud detection and AML monitoring.

However, the next generation of AI would be different as agents could move beyond performing defined tasks to responding to changing circumstances and acting on behalf of customers. Setty said such technology could improve decision quality, reduce response times and strengthen controls at India’s scale.

The initial cost of deploying agentic AI could be high, Setty said, but incremental costs would fall as the technology is deployed more widely, creating the potential for economies of scale.

‘99% accuracy is not enough’

Setty said trust must be embedded into agentic AI rather than added after deployment, warning that an autonomous system could trigger a chain of actions across multiple systems if it makes an error.

“There is nothing like 99% accuracy. You need to be 100% accurate, and every time, all the time,” Setty said, stressing that average accuracy was not sufficient when AI operates at population scale.

He identified three pillars of “trust at scale” — accuracy, accountability and access without asymmetry. Important AI-led decisions, he said, would require monitoring, traceability and the ability to understand why an action was taken.

Setty also stressed the importance of a “human in the loop”. As automation rises, employees can devote more time to relationships, problem-solving and deeper customer engagement, while complex and high-risk financial decisions continue to receive human oversight.

From KYC to ‘Know Your Agent’

Setty said banks had spent decades building systems around knowing customers, but autonomous AI agents participating in financial transactions would create a new requirement to establish their identity and authority.

A KYA framework, he said, would need to address agent identity, authentication, consent, transaction limits, audit trails and location. He also warned of an emerging “AI versus AI” environment, requiring identity, behavioural and transaction intelligence along with real-time risk assessment.

Setty said India’s next opportunity was to move from digital inclusion to “intelligent inclusion”, with AI making financial intelligence available to hundreds of millions of customers. He also called for foundational AI models that understand India’s diversity and said agentic AI would require a coalition involving governments, regulators, banks and technology companies.

Separately, Setty dismissed concerns that more than $127 billion of FCNR(B) inflows mobilised through the RBI’s special concessional swap window could result in “abnormal lending”. He said bankers would be responsible for deploying the funds and that the money would be deployed over the next three to four months.

Setty also said the RBI’s six-member Monetary Policy Committee was unlikely to raise the policy rate at its October review, despite market concerns over inflation risks arising from geopolitical tensions and a narrowing India-US rate differential.