Generative AI set to improve banking operations in India by 46%: RBI Report

A report from the Reserve Bank of India (RBI) suggests that generative Artificial Intelligence (AI) has the potential to enhance banking operations in India by up to 46%. The report highlights that financial institutions are increasingly adopting AI to improve efficiency, understand customer behaviour better, and offer more personalised services at a large scale. This adoption is driven by the need to enhance customer experience, boost employee productivity, increase revenue, and lower operational costs. Generative AI is playing a significant role in this by using advanced analytics to help institutions effectively manage risks and control costs. Furthermore, AI-powered alternative credit scoring models are crucial for expanding credit access to individuals who are not served by traditional banking systems. In India, where a large number of people still lack access to formal banking, AI can evaluate the creditworthiness of potential borrowers by analysing non-traditional data like utility bill payments, mobile usage patterns, Goods and Services Tax (GST) filings, or e-commerce transactions. This technology is instrumental in bringing "thin-file" or "new-to-credit" customers into the formal financial system.
The RBI report also notes that AI chatbots are transforming customer service by efficiently handling routine inquiries at any time, providing faster resolutions, and allowing human staff to focus on more complex tasks. The adoption of AI in the financial services sector is growing rapidly on a global scale. The report anticipates that AI will directly contribute to the industry's revenue growth in the years to come. The generative AI sector alone is projected to grow at an annual rate of 28-34%, potentially exceeding Rs. 1.02 lakh crore (US$ 11.64 billion) by 2033. The findings underscore that with appropriate application, AI can make Indian banking more inclusive, efficient, and customer-friendly while also fueling strong growth for the sector.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.