How AI Is Set to Transform Half of India’s Banking Jobs: BCG Report Insights

Mumbai: A recent report from the Boston Consulting Group (BCG) reveals that artificial intelligence could transform up to 50% of jobs in India’s banking sector. Presented at the FIBAC 2025 conference, the findings highlight a troubling stagnation in productivity despite significant IT spending. The report emphasizes that banks must embrace AI tools to improve efficiency, credit growth, and enhance financial inclusion, all vital to achieving India’s development targets by 2047.

AI’s Transformative Impact on Banking Jobs

The landscape of jobs within India’s banking sector is on the brink of a significant transformation due to artificial intelligence (AI). According to a compelling report by BCG presented during the FIBAC 2025 conference held in Mumbai, it’s projected that AI could reshape approximately 35% to 50% of current banking roles. Ruchin Goyal, a senior partner at BCG, warned that “Indian lenders face ‘sticky cost structures’ and limited efficiency improvements,” highlighting the pressing need for banks to adopt AI-driven tools.

For example, companies like HDFC Bank have started to integrate AI for customer service operations, which have reportedly improved response times and customer satisfaction. This trend indicates a larger shift where banks may need to embrace technology faster or risk falling behind their global counterparts.

Skyrocketing Costs Amid Limited Gains

The BCG report highlights a striking contradiction: While IT spending in the banking sector has surged fivefold over the last decade, productivity gains have remained stagnant at only 1%. IT expenses showed a robust Compound Annual Growth Rate (CAGR) of 17.4%, surpassing most other expenditure categories. By comparison, non-employee operating costs grew by 13.2%, and general expenses increased by 11.7%.

This growing financial strain raises questions about the effectiveness of investments made in technology. With banks facing pressure to optimize their cost structures, the challenge lies in translating IT spending into actionable efficiency improvements.

Cost Growth (FY15-FY25)	CAGR (%)	Comments
IT Costs	17.4%	Significant rise over the decade
Non-Employee Operating Costs	13.2%	Increasing financial strain
General Expenses	11.7%	Outpacing productivity gains

Stagnation in Credit Growth and Inclusion

Another major concern raised in the BCG report is the sluggish pace of credit expansion in India. To meet the ambitious Viksit Bharat 2047 development goals, banking asset growth needs to exceed nominal GDP growth by 3 to 3.5 percentage points. In FY25, credit growth was recorded at 12%, which barely surpassed the nominal GDP growth of 9.8%. This undershooting signals a worrying gap that could hinder India’s economic ambitions.

Moreover, the report indicates a significant decline in credit inclusion, where “new-to-credit” customers in the retail lending segment are decreasing by about 2% annually. With current credit bureau records covering just a third of India’s 100+ crore adult population, the road to expanding financial access appears long and arduous, potentially stretching over several decades under the existing rate of 2–3% new additions per year.

Policy Implications and Employment Concerns

As banks experiment with AI to streamline operations, a palpable tension has emerged around job security in the banking sector. The integration of advanced technologies is expected to enhance efficiency but may also lead to job losses akin to trends observed in the IT sector. Notably, many banks have adopted a cautious approach by refraining from replacement hiring for positions eliminated due to automation, leading to stagnation in overall employment figures.

The policy implications are profound. As the banking sector grapples with technological disruptions, there is an urgent need for policies that not only support technology adoption but also consider the workforce implications.

The Path Forward: Balancing Technology and Growth

The BCG report offers a clear message: for Indian banks to thrive and align with the country’s long-term developmental strategies, they must harmonize technological investment, credit expansion, and enhanced financial inclusion. The stakes are high; without decisive action, the banking sector may find itself mired in inefficiency, escalating costs, and sluggish financial outreach.

To sum up, the evolution of the banking sector rests heavily on the shoulders of innovative technological integration. Indian banks must take courageous steps now to capitalize on the benefits of AI and improve their operational frameworks, or risk being outpaced by international counterparts who have already embraced these advancements.

Bankerpedia’s Insight 💡

The BCG report highlights a pivotal shift in India’s banking sector, emphasizing that AI could revolutionize up to 50% of jobs. This transformation is crucial for enhancing efficiency, as stagnant productivity despite rising IT costs poses significant challenges. Banks must adopt AI smartly to optimize costs, drive credit growth, and bridge financial inclusion gaps. For readers, understanding these changes is essential; being open to new skills and adaptive to technological shifts will be vital. Essentially, embracing innovation is not just about survival—it’s about thriving in a rapidly evolving financial landscape.

How Does This Affect the Banking Ecosystem? 🏦

• Bank Employees → AI may reshape half of banking jobs in India.
• Bank Management → AI adoption critical for efficiency and job restructuring.
• Bank Customers → Increased costs and potential job disruptions in banking services.
• Investors / Shareholders → Increased efficiency potential, but job loss concerns persist.
• Regulators (RBI, SEBI, Govt.) → Increased regulatory focus on workforce management and technology adoption.
• General Public → Job displacement and reduced financial access in banking sector.

Research References 📚

• thekanal.in
• RBI
• SEBI
• Ministry of Finance
• NABARD
• Department of Financial Services (DFS)

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