Generative AI (GenAI) is poised to revolutionise India’s financial services sector, driving productivity gains of up to 46 per cent in banking operations by 2030, according to a new report by EY. The study, titled ‘How Much Productivity Can GenAI Unlock in India? The AIdea of India: 2025,’ reveals that the implementation of GenAI across banking and insurance sectors will lead to transformative improvements in customer service, operations, and risk management.
The report indicates that 74 per cent of financial firms have already initiated GenAI proof-of-concept projects, with 42 per cent of them actively budgeting for AI initiatives. GenAI is rapidly being deployed in various areas including voice bots, email automation, business intelligence, and workflow automation, with a notable focus on enhancing customer service.
“GenAI is no longer just an innovation pilot for the financial services industry. Firms are moving beyond experimentation to large-scale implementation, leading to substantial cost reductions and operational efficiencies,” said Pratik Shah, Partner and National Leader – Financial Services, EY India. “Banking operations, in particular, could see a productivity improvement of up to 46 per cent by 2030.”
As GenAI adoption accelerates, the banking sector is witnessing a significant reduction in the cost per unit of business activities, with some areas seeing costs slashed by as much as 90 per cent compared to traditional manual processes. Customer service remains the top priority for financial institutions, with 68 per cent of firms focusing on AI-driven solutions in this area. The investments are already yielding tangible results: 63% of companies report improved customer satisfaction, while 58 per cent have experienced cost reductions.
The report also highlights the leading role of non-banking financial companies (NBFCs) and mid-sized banks in driving GenAI adoption, especially in automating business intelligence and integrating AI into core banking functions. Meanwhile, large banks are focusing on enterprise-scale applications, such as AI-driven cybersecurity solutions and underwriting systems.
In insurance, the impact of GenAI is also significant as per the report, with customer service, new business processing, and claims management seeing efficiency improvements of up to 48 per cent. The technology is not only enhancing customer experiences but also streamlining back-end operations.
However, the rapid adoption of GenAI comes with its own set of challenges. Financial firms must navigate strict regulatory and cybersecurity requirements, including data localisation mandates and data privacy concerns. As a result, many institutions are deploying AI solutions in secure, local cloud environments and utilizing PII redaction tools to protect sensitive customer information.