AI risks keep me up at night, says Kotak Bank CEO
MUMBAI: Rapid advances in artificial intelligence (AI), including tools like Claude and emerging systems like Mythos, are reshaping the way banks assess cybersecurity risks, with the speed and scale of potential attacks emerging as a key concern, Kotak Mahindra Bank managing director and chief executive officer Ashok Vaswani said on Friday.
“If there’s one thing that keeps me up at night, it’s definitely that,” Vaswani said in the bank’s March quarter (Q4FY26) earnings conference call, pointing to the speed at which AI-driven threats could evolve. “The nature of cyber risk is fundamentally changing. We have always been prepared to deal with cyber attacks at human speed. Now we have to deal with cyber attacks at machine speed.”
This shift requires banks to significantly upgrade their response capabilities, from detecting vulnerabilities more quickly to implementing fixes at scale, Vaswani said.
The concern is also gaining traction at the policy level. Finance Minister Nirmala Sitharaman last week asked banks to prioritize strengthening their cyber defenses, immediately report suspicious digital activity and contact senior cybersecurity experts, according to a finance ministry statement published on X.
Chairing a high-level meeting with scheduled commercial banks and key stakeholders, Sitharaman said the evolving threat posed by the latest AI models is unprecedented and requires a high level of vigilance, preparedness and stronger coordination among financial institutions. He recommended the Indian Banks Association (IBA) to develop a coordinated institutional mechanism to respond quickly and effectively to such threats.
The meeting comes at a time when concerns are growing in the financial sector about potential disruptions and risks associated with recent developments in artificial intelligence, prompting the government and regulators to take a closer look.
As advanced AI systems become more widely adopted by large global firms, vulnerabilities may spread more quickly across interconnected systems. “Then we will need a very high rate of patching capability,” Vaswani said, adding that teams at the bank were already fully aware and prepared for this transition.
Earnings, margins and external risks
When asked how the bank was coping with the impact of the West Asian war, Vaswani said the ongoing crisis had not yet materially affected the bank’s books but risks remained. “These disruptions in the supply chain have not been reflected in our figures to date.”
However, he warned against complacency. “It would be naive to assume there is no impact… depending on how long this goes on, the greater the impact,” he said.
The bank has stepped up monitoring across portfolios and is engaging with customers to assess contingency plans. “What we’re really worried about is a second-order, third-order effect… you don’t see a direct effect but it pops up,” he added.
Lower provisions, improvement in asset quality and strong loan growth helped Kotak Mahindra Bank report a net profit of ₹200,000. ₹4,027 crore in Q4, up 13% YoY and 17% QoQ.
Provisions fell ₹516 crore ₹909 crore a year ago and fell 36% sequentially. On an annual basis, the cost of credit was 0.39% compared to 0.63% a quarter ago.
The bank’s loan growth increased by 16% annually ₹4.96 trillion and deposits increased by 15% annually ₹5.72 trillion. While the private sector bank refrained from giving an outlook on loan and deposit growth, management expects margins to come under some pressure.
The bank stated that deposit repricing has largely ended, but net interest margins may gradually soften.
“Going forward, we expect a more gradual decline in margin,” Chief Financial Officer Devang Gheewalla said, adding that the move would likely be limited to the range and not as sharp as this year.
Net interest income increased by 8% annually ₹7,876 crore. Net interest margin was 4.67% at the end of March, compared to 4.54% in the previous quarter.
