Indian Banks See Strong Growth As AI Adoption And Digital Infrastructure Expand: Report

Indian banks are witnessing positive growth trends, supported by sustained credit expansion, robust digital public infrastructure, and the increasing integration of artificial intelligence into their operational models, according to a recent report.

The report also highlighted that regulators are paying closer attention to issues such as climate-related financial risks, cyber resilience, and corporate governance standards in the sector.

According to a study released by KPMG International, Indian banks are matching their global peers in shifting from pilot AI initiatives to broader, enterprise-level adoption.

Financial institutions are also focusing on reskilling employees while improving cybersecurity systems and strengthening environmental, social and governance (ESG) practices to build long-term resilience.

The analysis draws on a survey conducted among 110 chief executives from the global Banking and Capital Markets sector.

The findings show that 83 per cent of CEOs remain optimistic about business growth over the next three years, while 65 per cent have placed artificial intelligence among their leading investment priorities.

Nearly seven in ten CEOs indicated that they intend to allocate between 10% and 20% of their budgets over the coming year to artificial intelligence projects.

Additionally, 59 per cent believe agentic AI technologies could significantly reshape their organisations, while 69 per cent expect returns on these investments within a period of 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 further emphasised.

Cybersecurity Identified as the Biggest Threat

Cybersecurity emerged as the most prominent threat, with 86 per cent of CEOs identifying cyber risks as the primary challenge to growth. Ethical concerns were mentioned by 56 per cent, while 55 per cent pointed to issues related to data preparedness and regulatory gaps.

Sanjay Doshi, Partner and Head of Transaction Services and Financial Services Advisory at KPMG in India, stated, “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.”

He explained that scale in the Indian banking sector is not only about size but also about expanding distribution networks, speeding up digital transformation and improving operational efficiency.

Doshi added that targeted consolidation and partnership-based growth strategies could open up new opportunities, strengthen market presence and enhance long-term competitiveness for banks.

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