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AI may drive next phase of banking efficiency and productivity, says PM Council paper

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AI may drive next phase of banking efficiency and productivity, says PM Council paper

AI may drive next phase of banking efficiency and productivity, says PM Council paper

The shift towards AI comes after a decade of technological development in banking, during which digitalisation and technology upgrades contributed to changes in the sector's efficiency and productivity.

Perhaps no application of AI in Indian BFSI carries greater strategic significance than the transformation of credit underwriting. (AI image)

AI-driven hyper-personalisation could help banks tailor products and services to individual customers, particularly younger users. Greater personalisation could help banks deepen customer relationships and strengthen institutional loyalty. The banking sector’s technology frontier reached 1.0087 in FY26, indicating a marginal positive shift in technological progress. The study identifies AI as a potential future driver of efficiency, rather than establishing that existing AI deployments have already improved banks’ efficiency.

Artificial intelligence (AI) and machine learning could support the next phase of efficiency and productivity gains in India's banking sector, with the Economic Advisory Council to the Prime Minister (EAC-PM) working paper pointing to the emergence of more autonomous and self-optimising banking ecosystems. The shift towards AI comes after a decade of technological development in banking, during which digitalisation and technology upgrades contributed to changes in the sector's efficiency and productivity. The emerging phase could see banks move beyond digital processes towards greater use of AI and machine learning. Advt

One area with significant potential is AI-driven hyper-personalisation , which could allow banks to tailor products and services to individual customers, particularly younger customers. Greater personalisation could help lenders deepen customer relationships and strengthen institutional loyalty.


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