Om Prakash Seth, CIO at IDBI Bank, unpacks the priorities, practical applications, and cultural shifts driving IDBI’s leap into the AI era while balancing regulatory discipline and relentless innovation.
Artificial Intelligence is no longer a futuristic idea in banking—it’s at the core of redefining customer experience, regulatory compliance, and operational resilience. In an exclusive conversation with Nisha Sharma, Senior Tech Correspondent at Tech Disruptor Media, Om Prakash Seth, CIO of IDBI Bank, shares his insights on how AI is shaping the future of banking. From conversational AI transforming customer interactions to AI-driven fraud detection and hyper-personalized financial services, He explains how IDBI balances strict regulatory frameworks with a culture of innovation and also discusses strategies for delivering omnichannel consistency, building trust through robust security, and empowering teams to reskill in the AI-driven era.
TDM: What are the top priorities for leveraging AI and data analytics in banking, and what practical use cases are you seeing emerging within your organization?
AI is becoming central to digital transformation in banking, especially for enhancing customer experience. A key focus is conversational banking using LLM-based bots (Agentic AI). Instead of menu-driven interfaces, customers will simply open the app, get biometric-based auto-authentication, and interact naturally (e.g., “transfer money” or “open a fixed deposit”)—all executed seamlessly without navigating menus.
A second major use case is fraud and AML monitoring. AI models analyze real-time transaction patterns across multiple dimensions (origin, value, network links, location shifts) to proactively detect suspicious activity like mule accounts or fraudulent transfers, significantly improving risk control.
Third, banks are adopting AI-powered contact centers where virtual agents handle queries with a human-like, data-driven approach, improving consistency and customer satisfaction.
Fourth, AI also enhances internal decision-making—for example, assisting employees in credit appraisal and other banking operations by providing insights that boost decision efficiency.
On digital transactions (e.g., NFC tap payments / Wi-Fi cards), while secure, risks exist at two levels:
- At the source, cards can be cloned, lost, or compromised.
- In transit – threats from open/public Wi-Fi or unsecured networks.
Stronger safeguards can include biometric authentication, card data, secure encrypted channels, and AI-driven fraud detection to ensure the card user is the owner. As digital adoption grows, adding multi-factor authentication and AI-based anomaly detection becomes essential to counter evolving threats.
TDM: How do you foster a culture of innovation among your IT teams while still meeting the strict regulatory demands?
Om Prakash Seth: In the context of a financial institution, the relationship between regulation and innovation is not a barrier but a strategic framework. As CIO, my role is to build a culture where this balance is not just managed but leveraged as a competitive advantage.
Here’s how we operationalize this:
1. Regulatory compliance as the foundation, not a fence:
First, we must reframe how we view regulation. It is not a set of restrictive fences but the essential foundation of trust and security upon which all innovation must be built. In banking, there is zero tolerance for compromising on this foundation. It ensures system integrity, protects customer data, and maintains financial stability—non-negotiables allowing us to innovate confidently.
2. Establishing “guardrails,” not gates:
The key is to move from gated processes to guided guardrails. Instead of a central committee saying “no” to new ideas, we establish clear, non-negotiable principles—data privacy rules, security protocols, audit trails—and then empower teams to explore freely within those boundaries. This shifts the mindset from “Is this allowed?” to “How can we make this innovative idea compliant?”
3. Enabling innovation with the right tools and sandboxes:
We foster innovation by providing the right environment:
- Secure sandbox environments: We’ve created isolated, production-like testing environments where developers can experiment with new technologies (AI APIs, new data models, blockchain) using synthetic or anonymized data. This allows for rapid prototyping without any risk to live systems or real customer data.
- Compliance-integrated development platforms: We invest in modern development tools and platforms with compliance “baked in.” For example, using tools that automatically log all actions for audit trails or that have built-in data loss prevention (DLP) features. This means innovators don’t have to become compliance experts; the tools help them build correctly by default.
4. Cultivating a culture of “governed innovation”
Ultimately, this balance is about culture. We run training sessions where both compliance officers and engineers collaborate on case studies. This breaks down silos and builds mutual understanding. Engineers learn the “why” behind regulations, and compliance officers learn about the potential of new technology. This collaborative spirit is what allows us to pioneer initiatives like our AI-powered fraud detection systems—projects that are deeply innovative yet rigorously compliant.
Our strategy is to build a superhighway with clear rules and safety barriers, not a maze of stop signs. This allows our talented teams to accelerate their ideas safely, ensuring that IDBI Bank remains both a secure fortress and a dynamic innovation hub.
TDM: What strategies are you using to enhance the customer experience through technology, especially with omnichannel personalization strengths?
Om Prakash Seth: At IDBI Bank, our strategy for delivering a superior customer experience is built on three core technological pillars:
1. Hyper-personalization through AI:
We move beyond one-size-fits-all service to create a true “wow” factor. Using AI, we analyze individual customer interaction patterns to build a detailed understanding of their preferences and needs. This allows us to create a unique persona for each customer and deliver hyper-personalized product offerings and services specifically curated for them, ensuring relevance and enhancing engagement.
2. Building trust with robust security:
The foundation of any customer relationship is trust, which in digital banking translates directly to security. We integrate advanced AI and modern security tools to proactively safeguard every transaction. This multi-layered approach ensures customers can bank with complete confidence, rest assured that their assets and data are protected.
3. Seamless agility & omnichannel consistency:
Today’s customers interact with their bank through multiple channels—mobile app, net banking, call center, WhatsApp, SMS, and video banking. We ensure a frictionless experience by leveraging modern, agile architectures like microservices and serverless computing. This makes our systems incredibly fast and responsive. Most importantly, it guarantees true omnichannel consistency: a customer can start a transaction on their mobile app and instantly get support for it via the call center or any other channel, receiving the same seamless experience and consistent information everywhere.
TDM: With growing reliance on AI and a new generation of employees bringing different mindsets from traditional patterns, do you find this shift more challenging and beneficial for the management?
Om Prakash Seth: Change is inevitable, and technology evolves rapidly—often every 3 to 5 years. As innovations emerge, older ones lose relevance, making reskilling essential for staying competitive and market-relevant. Teams must adapt by learning new skills aligned with the latest technologies. Whenever new systems are onboarded, reskilling programs should be conducted so that teams enhance their capabilities in technology management.
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