GenAI to boost Indian banking productivity by 46%

Generative AI (GenAI) is reshaping India’s financial services landscape, driving significant advancements in customer engagement, operational efficiency, and risk assessment, said a recent report of EY. The study highlights that GenAI is poised to improve productivity levels of Indian financial services by 34% to 38% by 2030 and up to 46%, specifically for banking operations.

The study further reveals that 74% of financial firms have initiated proof-of-concept projects, and 11% have moved to production-level deployments. Investment in GenAI is also increasing, with 42% of organisations actively allocating budgets toward AI initiatives. They are rapidly adopting GenAI across key areas such as voice bots, email automation, business intelligence, and workflow automation.

Customer service is the top priority, with 68% of firms prioritising it for GenAI implementation, followed by operations (47%), underwriting (32%), sales (26%), and IT (21%). These investments are already delivering measurable results: 63% have seen improved customer satisfaction levels, while 58% of firms report cost reductions.

From experimentation to large-scale adoption

According to the report, NBFCs, in particular, are aggressively deploying GenAI to automate business intelligence functions, enabling real-time insights into profitability and operational efficiencies. In contrast, large banks are focusing on enterprise-scale implementations, such as cybersecurity copilots, AI-driven underwriting copilots, and multi-channel AI-powered customer care platforms. Mid-sized banks are pioneering GenAI-driven orchestration layers that seamlessly integrate AI insights with core banking functions, demonstrating a long-term strategic commitment to AI adoption.

Challenges and way forward

Despite strong momentum, scaling GenAI presents challenges due to stringent regulatory and cybersecurity requirements. Data localisation mandates require financial firms to host GenAI endpoints within India using on-premise solutions or India-based cloud providers. Data privacy concerns necessitate that firms must avoid sending Personally Identifiable Information (PII) to GenAI APIs by using PII redaction tools and anonymised data to safeguard sensitive customer information.