Generative AI set to improve banking operations in India by 46 pc, says RBI report

NEW DELHI: Generative Artificial Intelligence (AI) has the potential to improve banking operations in India by up to 46 per cent, according to a report by the Reserve Bank of India (RBI). The central bank noted that AI can help financial institutions better understand customer behaviour, improve efficiency, and offer more personalised services at scale.

It stated, “GenAI is poised to improve banking operations in India by up to 46 per cent”. The report said AI is increasingly being adopted across the financial services sector. This adoption is being driven by multiple needs, including enhancing customer experience, improving employee productivity, increasing revenue, reducing operational costs, ensuring regulatory compliance, and enabling the creation of new and innovative products.

As per report, Generative AI, in particular, is playing a major role by using advanced analytics to help institutions understand customer behaviour, manage risks more effectively, and control costs. AI-powered alternative credit scoring models are also helping expand credit access to people who are underserved by the traditional banking system.

The RBI also stated that in India, where millions of people still do not have access to formal banking, AI can help assess the creditworthiness of potential borrowers using non-traditional data sources. These may include information such as utility bill payments, mobile usage patterns, GST filings, or e-commerce transactions. Such technology can help bring “thin-file” or “new-to-credit” customers into the formal financial system.

The report also pointed out that AI chatbots are transforming customer service by handling routine queries around the clock, providing faster resolutions, and freeing up human staff for more complex tasks. Globally, the adoption of AI in financial services has been growing rapidly.

The RBI report said that AI is expected to directly contribute to revenue growth for the industry in the coming years. The generative AI segment alone is projected to exceed Rs 1.02 lakh crore (about $12 billion) by 2033, growing at an annual rate of 28-34 per cent. The findings highlighted that with proper use, AI can make banking in India more efficient, inclusive, and customer-friendly while driving strong growth for the sector. (ANI)