AI-led operating models boost Indian banks

New Delhi: Indian banks are benefiting from sustained credit growth, strong digital public infrastructure and the rapid adoption of AI-driven operating models, according to a report by KPMG International.

The report said the sector is increasingly matching global peers in scaling artificial intelligence from pilot projects to enterprise-wide use, while investing in workforce reskilling and strengthening cybersecurity and ESG frameworks to support long-term resilience.

Based on a survey of 110 global Banking and Capital Markets CEOs, the report found that 83 per cent are confident about growth over the next three years, with 65 per cent ranking AI as a top investment priority. Around 70 per cent of CEOs plan to allocate 10–20 per cent of their budgets to AI in the next 12 months, while 59 per cent expect agentic AI to have a transformational impact. Nearly 69 per cent anticipate returns from AI investments within one to three years.

The report also highlighted the growing importance of workforce readiness. About 83 per cent of CEOs said reskilling for AI is a priority, while 79 per cent believe AI has redefined entry-level skills. However, 78 per cent warned that inadequate workforce readiness could negatively affect organisations. “As global banking leaders respond to rising operational and regulatory costs by pursuing scale and strategic M&A, the same imperative is increasingly shaping the Indian banking sector,” said Sanjay Doshi, Partner and Head of Transaction Services and Financial Services Advisory at KPMG in India.

The report also flagged risks, with 86 per cent of CEOs citing cyber insecurity as the top growth threat, followed by ethical challenges (56 per cent) and data readiness and regulatory gaps (55 per cent).