• Banks are strengthening partnerships with major technology vendors to counter AI-enabled cyber threats
• Indian lenders have identified 25 key technology providers for enhanced cyber resilience initiatives
• A multi-agency working group is developing a framework to identify vulnerabilities and strengthen sector-wide defences
• Regulators warn that third-party software and AI-generated code can create hidden systemic vulnerabilities
• Banks are deploying defensive AI tools to reduce network attack surfaces and improve threat detection
• Supervisors globally are increasing scrutiny of AI governance, vendor oversight and operational resilience
• Experts say effective cyber resilience requires stronger governance and communication alongside AI technology
• Financial institutions are increasingly treating cybersecurity as an ecosystem-wide risk management challenge



India's banking sector has emerged at the forefront of the trend, identifying 25 original equipment manufacturers whose software and applications are widely deployed across the industry for closer collaboration on AI-related cyber risk.

The initiative follows warnings from the Reserve Bank of India that AI-enabled cyberattacks represent one of the most significant systemic threats facing the country's financial sector.

A working group led by the State Bank of India, with participation from nine banks, the finance ministry, the Reserve Bank of India, the National Payments Corporation of India and the Indian Computer Emergency Response Team, is developing a broader framework to identify vulnerabilities and strengthen sector-wide cyber defences.

According to industry participants, banks are being encouraged to reduce their network attack surface by deploying defensive AI agents capable of detecting vulnerabilities before they can be exploited.

The framework also envisages regular reviews of mitigation measures as institutions adapt to an environment in which AI is increasingly being used by both defenders and attackers.

The initiative highlights a growing concern that even banks with robust internal controls remain vulnerable through weaknesses in third-party technology providers.

Researchers at the National Institute of Banking Management recently warned that financial institutions often lack visibility into the open-source software libraries, AI-generated code and external components embedded within the products they license.

A single vulnerability introduced through commonly used software could therefore spread across multiple institutions before it is detected, echoing the widespread disruption caused by previous software supply chain incidents.

The emphasis on vendor oversight mirrors a broader regulatory trend.

Banking supervisors in several jurisdictions are increasingly focusing on third-party risk management, data governance and AI oversight as financial institutions accelerate deployment of generative AI across customer service, fraud detection, software development and operational processes.

U.S. regulators, including the Office of the Comptroller of the Currency and the Federal Reserve, have expanded supervisory discussions around AI governance, vendor management and contingency planning, while continuing to rely on existing risk management frameworks rather than introducing AI-specific rules.

Cybersecurity experts also warn that adopting advanced AI tools alone will not be sufficient to strengthen resilience.

Industry analysts argue that banks must combine AI-enabled detection with clear governance, rapid incident response and effective customer communication if they are to maintain trust during cyber incidents.

As cyberattacks become faster and increasingly automated, organisations will need operational processes capable of matching the speed of AI-driven threats.

The wider economic implications are also attracting attention from regulators. The Monetary Authority of Singapore recently warned that rapid advances in artificial intelligence are increasing cybersecurity risks alongside broader financial stability concerns.

The authority noted that AI-powered phishing campaigns and increasingly sophisticated cyberattacks are becoming more prevalent, prompting renewed investment in advanced defensive technologies across the financial sector.