Drivers of AI-Enabled CRM Adoption in the Indian Banking Sector: An Integrated Conceptual and Empirical Review

AI-enabled Customer Relationship Management marks a significant evolution within the Indian banking service sector, driven by the need to fuse advanced digital technology with relationship-centred banking strategy. As competition sharpens and customer expectations climb, AI-CRM has moved from being a mere operational tool to functioning as a genuine strategic capability — a shift now visible not only in the conceptual literature but in official regulatory data. This study identifies technological readiness, underpinned by India's Digital Public Infrastructure and an exponential surge in digital-payment touchpoints, as a foundational driver that lets banks deploy AI on the strength of robust IT infrastructure and integrated digital platforms. Rising demand for personalisation further pushes adoption forward, as AI-CRM allows banks to offer tailored products, proactive service, and a seamless omnichannel experience that strengthens engagement and loyalty. Banks' strategic orientation toward digital transformation reinforces AI-CRM implementation, positioning AI as a long-term investment aligned with customer-centric, innovation-driven objectives, while competitive pressure from private banks, FinTech firms, and digital financial-service providers pushes traditional institutions toward AI-CRM for service differentiation — increasingly through partnership rather than pure competition, as the 84% bank-FinTech collaboration rate illustrates. Empirical evidence from the Reserve Bank of India confirms that private banks, larger-asset institutions, and well-capitalised banks are leading this transformation, supported by extensive FinTech partnerships, while regulatory influence — most recently through the RBI FREE-AI Committee's seven Sutras — increasingly steers responsible AI use in data protection, risk management, and customer trust. Data-driven decision-making functions as a core driver in its own right, letting banks convert large volumes of customer data into actionable insight for better relationship management and strategic planning; increasingly, however, how well banks manage privacy, security, and trust will determine whether these gains are sustained. By framing AI as a relationship-enhancing capability rather than a purely operational one, and by grounding that framing in official empirical data, this study adds to the literature on digital transformation in banking and offers a combined conceptual-empirical foundation for future research into AI-enabled CRM adoption and its outcomes within the Indian banking context and comparable emerging markets.

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