AI Could Change How India Pays, Borrows And Invests: Report

Artificial Intelligence (AI) is moving into a new phase in India's financial sector, with banks, fintech companies and other financial institutions increasingly looking to use the technology for decisions and operations rather than just automation.

A new report by ASSOCHAM and KPMG in India said AI could become the “intelligence layer” of India's financial ecosystem as the country moves from digital finance towards more automated and adaptive financial services. The report was released at ASSOCHAM's 3rd India International Fintech Festival.

India's existing digital infrastructure could give it an advantage in this transition. Digital identity, real-time payments, consent-based data sharing and digital records have already created systems that can support wider AI adoption, the report said.

AI Adoption Moves Beyond Experiments

The report said financial institutions are increasingly moving AI projects from the pilot stage to wider deployment, with a greater focus on measurable business results and returns on investment.

AI is already being used across areas such as customer service, fraud detection, compliance, risk management and lending. The report expects Generative AI and agentic AI to expand these use cases further across payments, insurance, wealth management and other financial services.

Akhilesh Tuteja, Partner and National Leader – Clients and Markets, KPMG in India, said AI could determine the next phase of India's fintech growth. “India's next phase of fintech leadership is likely to be defined not by digital infrastructure alone, but by how effectively intelligence is embedded across the ecosystem,” he said.

The shift could also change how financial institutions use the large amounts of transaction, identity and behavioural data generated by India's digital economy. Hemant Jhajhria, Head of Consulting, KPMG in India, said AI could turn this information into “insight, decisions and action”.

Infrastructure And Trust Remain Key

However, wider AI adoption will require more than access to technology. The report called for greater computing capacity, better AI-ready datasets and more interoperable data systems to support the next stage of deployment.

It also highlighted risks around privacy, cybersecurity, model errors and accountability. Stronger governance, transparency and explainability will therefore be important as AI takes on a larger role in financial decision-making.

The report also called for standards to support agentic AI systems and greater use of voice-based, vernacular and accessible interfaces. Such tools could help extend AI-enabled financial services to a wider section of the population.

Saurabh Sanyal, Secretary General of ASSOCHAM, said the combination of AI, India's digital infrastructure and regulation could help deepen financial inclusion and strengthen the country's position in global digital finance.

The broader opportunity, according to the report, is to build financial services where AI is embedded into everyday operations rather than used as a standalone technology. The success of that transition, however, will depend on India's ability to balance faster innovation with security, trust and responsible use.