AI In Banking: From Tokens To Talkbots

After the big wave of digitalisation, banks are entering the age of Al, which is making banking not just convenient, but smart. With strong guardrails in place, the industry is ready for its next big technological leap

- Kundan Kishore

Digitisation has changed the banking experience dramatically over the years, doing away with the need for visiting a branch for everyday transactions. But even digitisation has its limits. Enter AI, which is making banking not just convenient but smart. Chatbots answer questions instantly, AI checks for fraud and your eligibility for loan within seconds. What took hours at a branch earlier now happens in minutes with AI.

The use of AI in banking operations began around 2016, when ICICI Bank introduced "software robotics" across more than 200 business processes. These systems emulate human actions to automate repetitive, high-volume, and time-consuming tasks across multiple applications. In 2017, State Bank of India (SBI) introduced SBI Intelligent Assistant (SIA), an AI-based smart chat assistant, that resolves queries of non-resident Indian customers. In 2018, Bank of Baroda also introduced an AI-enabled robot, Baroda Brainy.

According to a study released by the Reserve Bank of India (RBI) in December 2024, based on the annual reports of 32 commercial banks for eight years, FY2015-16 to FY2022-23, discussions on the use of AI in Indian banking date back to 2015-2016.

However, banks are still in the early stages of AI adoption. "I believe the banking industry will inevitably move in this direction. In the next 5-10 years, most banks are likely to operate more like technology companies with banking licences," says Bhavnish Lathia, chief technology officer, Kotak Mahindra Bank.

Let's assess Al's impact on banking.

Expanding Capabilities

According to an EY report, The Idea of India 2025, "Big banks have taken up large-scale implementation projects focused on GenAI in the last few months of 2024. These projects talk of using GenAI in areas from cyber security copilot and corporate lending underwriting copilots to AI driven customer care platform implementations and on-premise GPU cloud deployments."