Artificial Intelligence Adoption in Indian Banking: Implications for Organisational Readiness, Operational Efficiency, and Risk Mitigation

While the study confirms the potential of AI to enhance banking, its effectiveness is not solely about technology. AI benefits more for better-prepared banks with experienced personnel, robust systems, and productive management compared to less well-equipped banks. Additionally, the findings indicate that while AI can enhance efficiency and mitigate risk, there is a need to address fairness, privacy, and responsibility concerns. A lack of systems to track the use of AI by many banks is underscoring the need for clear rules and improved oversight. AI in banking will be most valuable in the long-term run if it is deployed with care, integrity, and the support of both banks and regulators. The study findings suggest that banks should view AI more as a long-term strategic asset and not merely an automation tool for repetitive operational tasks. To gain all the advantages, banks should prioritise employee training, improve digital infrastructure, and ensure responsible data use. AI in banking should also be regulated with clear AI use rules so that the use of AI is consistent, safe, and fair among institutions. Reducing the disparity between large and small banks is also critical because an unequal distribution of technology can exacerbate the differences between them. The study, therefore, highlights the need for a balanced approach that combines technology, regulation, and human expertise. The present research work contributes to the literature by demonstrating the impact of AI on efficiency and risk management within the Indian banking sector in a unified context. It also points to the crucial factor of organisational readiness, which may be the answer to why some banks are succeeding with AI while others are not. Moreover, the study highlights ethical and legal aspects not always so emphasised in other studies, namely fairness, accountability, and privacy. It provides real-world examples of how AI can be used safely and effectively in financial services, targeted at Indian banks, to give managers and policymakers real-life scenarios to consider when implementing the technology.

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