How Indian Banks are Thriving with AI-Powered Strategies: Insights from KPMG

Key Takeaways

Indian banks are leveraging AI for operational growth.

83% of CEOs expect growth in the next three years.

70% plan to allocate significant budgets to AI.

Cybersecurity is a major concern for 86% of bank leaders.

Reskilling the workforce is critical to AI integration.

New Delhi, March 13 (NationPress) Indian banks are reaping benefits from consistent credit expansion, enhanced digital public infrastructure, and the swift integration of AI-driven operating models. Additionally, there's an increased regulatory emphasis on climate risk, cyber resilience, and governance, according to a report released on Friday.

The KPMG International report highlights that the banking sector is aligning with global counterparts, transitioning from pilot projects to extensive AI applications. This includes investments in workforce reskilling and bolstering cybersecurity and ESG frameworks to ensure long-term resilience.

In a survey involving 110 CEOs from global Banking and Capital Markets, 83% expressed confidence in growth over the next three years, with 65% identifying AI as a critical investment focus.

Approximately 70% of CEOs intend to channel 10–20% of their budgets over the next 12 months into AI initiatives. Furthermore, 59% foresee agentic AI having a transformative effect, while 69% expect returns within one to three years.

The report noted, "Around 83% of banking and capital market CEOs prioritize reskilling for AI. Meanwhile, 79% believe AI has transformed entry-level skills, and 78% caution that a lack of workforce readiness could adversely affect organizations if not addressed."

“As leaders in global banking tackle rising operational and regulatory expenses through growth and strategic mergers and acquisitions, a similar trend is increasingly influencing the Indian banking landscape,” stated Sanjay Doshi, Partner and Head of Transaction Services and Financial Services Advisory at KPMG in India.

Doshi emphasized that for India, scale transcends mere size; it acts as a key driver for expanding distribution, hastening digital transformation, and improving cost efficiency.

As banks deepen their technological investments and modernize their operational frameworks, targeted consolidation and partnerships can open new markets, enhance value propositions, and foster long-term competitive resilience, he added.

Notably, 86% of CEOs identified cyber insecurity as the foremost threat to growth, while 56% mentioned ethical dilemmas, and 55% highlighted issues with data readiness and regulatory discrepancies.

aar/na

Point of View

It's clear that the Indian banking sector is evolving significantly, with a strong focus on AI integration and resilience strategies. This growth is crucial for maintaining competitive advantages in a rapidly changing financial landscape.

NationPress

9 Jul 2026

Frequently Asked Questions

What are the main benefits of AI for Indian banks?

AI provides Indian banks with enhanced operational efficiency, improved customer service, and the ability to analyze vast amounts of data for better decision-making.

How are Indian banks addressing climate risk?

Indian banks are increasingly focusing on governance and regulatory compliance regarding climate risk, ensuring sustainable practices are embedded in their operations.

What percentage of CEOs prioritize AI investment?

According to the KPMG report, 65% of banking and capital markets CEOs consider AI a top investment priority.

What challenges do banks face with AI implementation?

Challenges include workforce readiness, ethical considerations, and cybersecurity threats, which need to be addressed to fully leverage AI's potential.

What role does digital infrastructure play in banking growth?

Robust digital infrastructure allows banks to enhance service delivery, streamline operations, and adapt to the evolving needs of customers effectively.