• 74% financial firms have initiated GenAI proof-of-concept projects
• 42% actively allocating budgets toward AI initiatives
• NBFCs and insurers lead GenAI adoption
• Rapidly adopting AI across voice bots, email automation, business intelligence, and workflow automation

Generative AI (GenAI) is reshaping India’s financial services landscape, driving significant advancements in customer engagement, operational efficiency, and risk assessment. The EY report titled “How much productivity can GenAI unlock in India? The AIdea of India: 2025”, highlights that GenAI is poised to improve productivity levels of Indian financial services by 34% to 38% by 2030 and up to 46%, specifically for banking operations. The EY study reveals that 74% of financial firms have initiated proof-of-concept projects, and 11% have moved to production-level deployments. Investment in GenAI is also increasing, with 42% of organizations actively allocating budgets toward AI initiatives. They are rapidly adopting GenAI across key areas such as voice bots, email automation, business intelligence, and workflow automation.

Customer service is the top priority, with 68% of firms prioritizing it for GenAI implementation, followed by operations (47%), underwriting (32%), sales (26%), and IT (21%). These investments are already delivering measurable results: 63% have seen improved customer satisfaction levels, while 58% of firms report cost reductions.

Reflecting on the report findings, Pratik Shah, Partner and National Leader – Financial Services, EY India said, “The financial services industry has moved beyond innovation pilots to real-world implementation in 2024-25. Firms are integrating GenAI with core banking systems, including CRM, loan origination, card management platforms, among other areas. These efforts have led to a significant reduction in operational costs, with AI-driven solutions slashing the cost per unit of normal business activities to as low as 1/10th of traditional manual processes.”

“As firms move from pilots to large-scale implementations, the focus must shift from isolated use cases to enterprise-wide integration. The key to unlocking GenAI’s full potential lies in building robust AI governance, ensuring data security, and aligning technology with core business objectives. While NBFCs and mid-sized banks have demonstrated early success, large banks are now accelerating adoption. The coming years will define how effectively financial institutions can balance innovation with regulatory compliance to drive sustainable growth, operational excellence, and superior customer experiences.”, he added.

Productivity gains across the sector

The EY study, which analysed over 700 roles in the sector (more than 300 in banking and 400 in insurance) projects that GenAI will drive a 34% to 38% productivity improvement by 2030, paving the way for growth and operational transformation in the industry. It is poised to significantly impact banking operations, customer service, and credit and collections.

• Banking operations could see productivity gains of up to 46% by 2030, while sales and customer service functions are projected to improve by 38% to 40%.
• Credit and collections processes stand to benefit from a 34% to 36% boost in productivity,
• In insurance, the technology is expected to transform customer service, with an estimated 48% increase in efficiency
• New business processing, sales, and partner management could see improvements of up to 45% to 48%.
• Investments in new product development and claims management are also emerging as high-impact areas where GenAI can enhance productivity.

From experimentation to large-scale adoption

According to the EY report, NBFCs, in particular, are aggressively deploying GenAI to automate business intelligence functions, enabling real-time insights into profitability and operational efficiencies. In contrast, large banks are focusing on enterprise-scale implementations, such as cybersecurity copilots, AI-driven underwriting copilots, and multi-channel AI-powered customer care platforms. Mid-sized banks are pioneering GenAI-driven orchestration layers that seamlessly integrate AI insights with core banking functions, demonstrating a long-term strategic commitment to AI adoption.

Financial institutions are implementing GenAI-driven solutions that are fundamentally altering traditional processes. AI-powered customer service and collections platforms are automating high-volume interactions across multiple digital touchpoints, improving response times, personalization, and accuracy. Compliance and regulatory functions are benefiting from AI-powered query handling, by embracing conversational business intelligence bots. Key applications include customer interactions via WhatsApp, email, SMS, mobile apps, websites, and voice channels.

Challenges and way forward

Despite strong momentum, scaling GenAI presents challenges due to stringent regulatory and cybersecurity requirements. Data localization mandates require financial firms to host GenAI endpoints within India using on-premise solutions or India-based cloud providers. Data privacy concerns necessitate that firms must avoid sending Personally Identifiable Information (PII) to GenAI APIs by using PII redaction tools and anonymized data to safeguard sensitive customer information. Additionally, financial institutions must deploy GenAI solutions within secure Virtual Private Cloud (VPC) environments to mitigate cybersecurity risks. As firms continue to integrate GenAI into core financial systems, the sector is set for a new era of innovation, efficiency, and customer-centric growth.