Generative AI can improve India's banking operations by 46%: RBI
What's the story
A recent report by the Reserve Bank of India (RBI) has revealed that generative artificial intelligence (AI) can improve banking operations in India by up to 46%. The central bank highlighted the potential of AI in helping financial institutions understand customer behavior better, enhance efficiency, and provide personalized services on a larger scale.
Sectoral shift
AI transforming financial services landscape
The RBI report also noted the growing adoption of AI in the financial services sector. This trend is driven by a number of factors, including improving customer experience, boosting employee productivity, increasing revenue, cutting operational costs, ensuring regulatory compliance, and developing new products. Generative AI is especially important as it uses advanced analytics to help institutions understand customer behavior better and manage risks more effectively.
Credit expansion
Alternative credit scoring models can extend credit access
The RBI report also highlighted the role of AI-powered alternative credit scoring models in extending credit access to those underserved by traditional banking systems. In India, where millions lack formal banking access, AI can assess potential borrowers' creditworthiness using non-traditional data sources like utility bill payments, mobile usage patterns, GST filings, or e-commerce transactions. This technology could bring "thin-file" or "new-to-credit" customers into the formal financial system.
Service transformation
AI chatbots revolutionizing customer service
The RBI report also noted that AI chatbots are changing the face of customer service. They handle routine queries round the clock, provide faster resolutions, and free up human staff for more complex tasks. This not only improves efficiency but also enhances customer experience by providing timely assistance to their queries.
Revenue impact
Generative AI segment to drive revenue growth
The RBI report also predicts that AI will directly contribute to revenue growth in the financial services industry. The generative AI segment alone is expected to surpass ₹1.02 lakh crore (about $12 billion) by 2033, growing at an annual rate of 28-34%. These findings underline the potential of AI as a tool for making banking operations more efficient and customer-friendly while driving strong growth for the sector.