India’s banking sector is evolving at an incredible pace, driven by the rapid rise of digital payments and financial inclusion. In just five years, UPI’s share in India’s digital payments ecosystem has more than doubled—from 34% in 2019 to a staggering 83% in 2024, according to the RBI’s payment system report. This shift isn’t just about numbers; it’s about how Indians are adopting seamless, real-time transactions like never before. In 2024 alone, the country recorded 208.5 billion digital payment transactions, proving that cashless is becoming the new normal. Till date, the banking deposits grew by 10.83 per cent year-on-year (Y-o-Y) to Rs 221.50 trillion.
But here’s the catch—despite this boom, an RBI survey shows that banks are investing less than 10% of their budgets in emerging technologies. Without significant investment in AI-driven transformation, this momentum could stall, leaving financial institutions struggling to meet evolving consumer expectations and expand their reach to underserved populations.
Investing in Emerging Tech to Reach the Last Mile
To redefine the banking ecosystem and drive financial inclusion, banks must invest in emerging technologies like AI and ML. India’s digital economy is expanding nearly twice as fast as the overall economy and is projected to contribute one-fifth of national income by 2029-30. India is among the fastest-growing FinTech markets in the world, with AI-powered solutions transforming credit assessments, fraud detection, and customer interactions. Mobile banking transactions in rural areas have surged by 200%, signaling a growing need for tech-driven financial services.
One of the most promising advancements in this space is Agentic AI, an advanced form of AI that can autonomously make real-time decisions, learn from interactions, and enhance banking operations without continuous human intervention. Unlike traditional AI, Agentic AI enhances fraud detection, automates complex workflows, and delivers hyper-personalised financial services. Additionally, technologies such as blockchain for secure transactions, quantum computing for risk assessment, and IoT-driven data analytics can further strengthen banking ecosystems.
Bridging the Gap with a Phygital Approach
According to EY-CII data, 86% of rural consumers still trust traditional banking methods. This trust is a serious factor that banks must address when encouraging digital adoption. Integrating digital tools with physical touchpoints—known as the phygital approach—can bridge this trust gap effectively. Agentic AI enhances this hybrid model by:
- Deploying AI-driven virtual advisors for personalised financial planning.
- Implementing AI-powered chatbots for immediate customer support and onboarding simplification.
- Utilising smart workflows to eliminate paperwork, boost efficiency, and enhance customer experience.
This combination of human interactions and AI-powered solutions will significantly improve accessibility, confidence, and adoption rates in underserved regions.
Automating Repetitive Tasks to Enhance Efficiency
Agentic AI enhances banking efficiency by automating tasks like compliance checks, transaction processing, and customer verification, improving accuracy and speed. Studies indicate automation can increase workforce productivity by up to 40%. By automating routine tasks, banks can reallocate human resources toward high-value, client-focused activities such as financial advisory and relationship management. This shift not only enhances operational efficiency but also drives deeper customer engagement and trust.
Driving Financial Inclusion with Agentic AI
Agentic AI’s advanced reasoning and customer-centric analysis enable highly personalised financial services, bridging financial literacy and access gaps across India. AI-powered advisors can tailor investment recommendations, savings plans, and budgeting advice based on individual financial behaviors and risk tolerance. In rural areas, AI can integrate with local systems to offer targeted financial literacy programs, guiding customers on savings and micro-loan access.
Also Read | The Future of Business – How Agentic AI is Enabling Autonomous Operations
The Road Ahead
As India advances toward its Viksit Bharat 2047 vision, embracing Agentic AI will be crucial for banks seeking to redefine customer engagement, operational efficiency, and risk management. By integrating AI-driven solutions and adopting a phygital approach, banks can empower millions of underserved consumers while enhancing trust and security in financial services. Investing in these transformative technologies will create a more resilient and inclusive banking ecosystem, ensuring sustained growth and innovation in India’s financial sector.
Views Expressed By:- Ankur Pandey, Co-Founder and CTO, Signzy
