Indian Banking sector has undergone and currently undergoing multiple transformative changes, like UPI, UPI Lite, Digital Rupee (e₹), etc. As a result, India has transformed itself in a short time from cash-based to digital payment-based country, putting us in leagues ahead of many developed nations.

In this dynamic landscape, Banks are looking at AI, particularly Generative AI (Gen AI), to usher in a new era of efficiency, hyper-personalisation, and resilience.

Here is a brief overview how Gen AI set to reshape the Indian banking industry.

Efficiency Redefined

Gen AI streamlines banking operations by empowering front-line staffs and decision-makers alike. Bankers often have to read lengthy, jargon-loaded financial documents to make key business decisions within short span of time. Gen AI chatbots provide succinct summaries of such documents to unearth key insights that may have been otherwise overlooked. This will enable banks to serve their vast customer base more effectively while optimizing resources.

Hyper-Personalized Customer Engagement

Gen AI can help banks develop hyper-personalised products and services that are tailored to the unique needs of their customers. It can also replace IVRS with Gen

AI voicebots that are more tuned to customer sentiments and can respond accordingly. From rural communities to urban centres, Gen AI enables banks to understand local preferences and behaviours, fostering deeper connections and driving customer loyalty.

Risk Management Reinvented

In a complex business environment, banks need to be aware of and manage all types risks – regulatory, financial, economic, geo-political, etc. While there are AI-powered risk management systems to identify risks, these lack explainability which undermines the impact. Gen AI can provide the explanation needed to justify the risk predictions.

Informed Decision Making

Gen AI copilots can assist decision makers in many ways – from providing key data insights at critical junctures to provide alternative solutions to synthesis and triangulation of vast data banks. This can empower Indian banks to make data-driven decisions with confidence and speed.

Compliance and Security Strengthened

As regulators step to ensure Indian Banks are the most stable and reliable in the world, Gen AI emerges as a vital ally for Indian banks. Gen AI-driven compliance tools ensure adherence to regulatory standards, while robust cybersecurity solutions fortify defences against cyber threats, enhancing trust and confidence among Indian customers and regulators.

However, banks should strategise their adoption of Gen AI to prevent challenges related to hallucinations, data and training privacies, etc. Gen AI implementations should come with guardrails to prevent unfortunate scenarios. Proper model governance should be implemented to ensure the divergence between Gen AI output and desired outcome.

The Path Forward

Gen AI has potential to revolutionise Indian banking industry and take it to commanding heights of the world economy. However, they must balance innovation with ethics to drive inclusive growth and financial empowerment across the nation.

By Shirshendu Bikash Mandal – VP, Gen AI Solutions.