A new report has said that artificial intelligence could reshape up to half of the roles in the Indian banking sector. The findings come amid growing concerns about AI disrupting jobs across industries.
According to the report, Indian banks have increased their spending on information technology nearly five times over the past decade, but productivity gains have remained low at just 1 per cent. This puts Indian lenders behind their global peers in terms of efficiency.
Experts believe that embracing AI could help overcome these challenges. “We feel that about 35 to 50 per cent of jobs can get reshaped if banks are able to boldly embrace these new technologies, and that will be a prerequisite if the banking sector has to break the sticky cost structures that they’ve been encountering over the last few years,” said Ruchin Goyal, a senior partner at a consultancy firm, while speaking at a recent banking event in Mumbai.
The formal job market has already been impacted by AI, with some industries such as IT seeing large scale layoffs. In banking, net headcount growth is also slowing, with many lenders choosing not to replace employees as technology takes over certain roles.
The report noted that Indian banks will have to increase spending on technology, which still lags behind global banks. Over the last decade, IT expenses grew at a compounded annual rate of 17.4 per cent, making it the largest contributor to rising operating costs. Non-employee operating expenses followed with 13.2 per cent growth, while general expenses rose by 11.7 per cent.
Another key challenge highlighted is the need for faster credit growth to support India’s ambition of becoming a developed nation by 2047. The report said, “Banking assets growth must outpace nominal GDP growth by 3 to 3.5 percentage points to power Viksit Bharat mission.” In FY25, credit growth stood at 12 per cent compared with a 9.8 per cent rise in nominal GDP.
The study also pointed out a decline in the share of new-to-credit customers in retail lending, dropping at about 2 per cent annually. Currently, only one-third of India’s adult population has records with credit information companies, and at the current pace, inclusion will take decades.
Also read: Viksit Workforce for a Viksit Bharat
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