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Indian Banks Lead in AI Adoption, Eye Growth Amid Cyber Risks: KPMG

Indian banks are benefiting from strong credit growth, advanced digital infrastructure, and the rapid adoption of AI-driven operating models, according to a KPMG International report. The report, based on a survey of 110 global Banking and Capital Markets CEOs, found that 65% rank AI as a top investment priority, with 70% planning to allocate 10-20% of their near-term budgets to it. CEOs are highly focused on workforce reskilling for AI, with 83% prioritizing it, while also identifying cyber insecurity as the foremost threat to growth. Sanjay Doshi of KPMG India noted that the pursuit of scale and strategic M&A is shaping the Indian banking sector to enhance distribution, digital transformation, and cost efficiency.

Key Points: Indian Banks Benefit from AI Models, Face Cyber Threats: Report

  • Sustained credit growth boosts banks
  • AI is top investment priority for CEOs
  • 70% plan 10-20% budget for AI
  • Cyber insecurity seen as top growth threat
2 min read

Indian banks benefit from AI‑driven operating models: Report

KPMG report: Indian banks gain from AI-driven models, credit growth, and digital infrastructure, with CEOs prioritizing AI investment and reskilling.

"Around 83 per cent banking and capital market CEOs are prioritising reskilling for AI - KPMG Report"

New Delhi, March 13

Indian banks are benefiting from sustained credit growth, deeper digital public infrastructure and rapid adoption of AI‑driven operating models, and heightened regulatory focus on climate risk, cyber resilience and governance, a report said on Friday.

The report from KPMG International said the sector is at par with global peers scaling from pilots to enterprise AI use, 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 83 per cent are confident about growth over the next three years and 65 per cent ranked AI as a top investment priority.

Around 70 per cent CEOs said they plan to allocate 10-20 per cent of next‑12‑month budgets to AI, while 59 per cent expect agentic AI to have a transformational impact and 69 per cent expect returns within one to three years.

"Around 83 per cent banking and capital market CEOs are prioritising reskilling for AI; 79 per cent say AI has redefined entry‑level skills whereas 78 per cent warn AI workforce readiness could negatively impact the organisation if not addressed," the report said.

"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, Transaction Services and Financial Services Advisory, KPMG in India.

Doshi said that scale is more than just size for India but a catalyst for expanding distribution, accelerating digital transformation and enhancing cost efficiency.

As banks deepen their investments in technology and modernize their operating models, selective consolidation and partnership‑led growth can unlock new markets, strengthen value propositions and build long‑term competitive resilience, he added.

Around 86 per cent CEOs cited cyber insecurity as the top growth threat, 56 per cent cited ethical challenges, and 55 per cent pointed to data readiness and regulatory gaps.

- IANS

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Reader Comments

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Priya S
While AI adoption is impressive, the report highlights a major concern: 86% of CEOs see cyber insecurity as the top threat. As we go more digital with UPI and everything, banks must invest equally in iron-clad security. My data's safety is non-negotiable.
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Aman W
"Scale is more than just size" - this quote from the KPMG partner hits the nail on the head. For a country like India, it's about reaching the last mile customer in a village with efficient, low-cost services. AI can be a great enabler for that if implemented thoughtfully.
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Rebecca D
The ethical challenges (cited by 56%) are something we should talk about more. AI in banking isn't just about efficiency; it's about fair lending, avoiding bias in algorithms, and transparency. Hope the regulators are keeping a close watch on this aspect.
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Karthik V
Good progress, but a word of caution from a tech professional. Moving from pilots to enterprise-wide AI is a massive leap. It requires clean data, which many legacy banks might struggle with. Hope the 55% pointing to data readiness gaps are getting the budget to fix it!
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Meera T
Consolidation and partnerships sound promising for growth, but let's ensure it doesn't lead to reduced competition and fewer choices for us customers. The end goal should be better service, not just bigger banks.

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