Amid rising concerns over artificial intelligence (AI) taking over jobs, a consultancy firm has said the adoption of technology can impact and 'reshape' half the roles in Indian banking sector.
In a report, Boston Consulting Group (BCG) said that the gains in productivity are limited despite a nearly five-times increase in information technology spending of banks over the last decade.
The firm forecast actual productivity gains at 1 per cent for Indian banks, adding that added that lenders from the country are behind their global counterparts.
It further said that adopting to AI can overcome the challenge posed by limited productivity gains and said many banks are already adopting such tools.
"We feel that about 35-50 per cent of jobs can get reshaped if banks are able to boldly embrace these new technologies, and that will be a prerequisite if the banking sector has to break the sticky cost structures that they've been encountering over the last few years," its senior partner Ruchin Goyal said while speaking at the annual Fibac event in Mumbai.
The job market in formal sector has faced challenges from the adoption of AI, with some sectors like I-T already laying off a large number of people.
In case of banking, there is a decline in the net headcount growth or a reduction in the overall employee base as well, as many lenders prefer not to replace roles with newer hires due to the advent of technology.
Goyal said Indian banks will increasingly spend on technology as this is currently lower than the global banks.
With a compounded annual growth rate of 17.4 per cent, IT cost leads the pack on a jump in operating expenses over the decade to FY25, followed by non-employee operating expense at 13.2 per cent and general operating expenses at 11.7 per cent, according to the report.
It further highlighted other challenges, including growth in bank credit needed for achieving the goal of becoming a developed nation by 2047.
"Banking assets growth must outpace nominal GDP growth by 3-3.5 percentage points to power Viksit Bharat mission," the report said.
Credit growth moderated to 12 per cent in FY25 against a 9.8 per cent rise in the nominal GDP.
The consultancy's report also said that the share of new-to-credit customers in retail lending has continued to decline at about 2 per cent per annum.
Only a third of the over 100 crore Indian adults have records with credit information companies, and it will take a very long time if the additions are just 2-3 per cent, Goyal warned.
(With PTI inputs)
In a report, Boston Consulting Group (BCG) said that the gains in productivity are limited despite a nearly five-times increase in information technology spending of banks over the last decade.
The firm forecast actual productivity gains at 1 per cent for Indian banks, adding that added that lenders from the country are behind their global counterparts.
It further said that adopting to AI can overcome the challenge posed by limited productivity gains and said many banks are already adopting such tools.
"We feel that about 35-50 per cent of jobs can get reshaped if banks are able to boldly embrace these new technologies, and that will be a prerequisite if the banking sector has to break the sticky cost structures that they've been encountering over the last few years," its senior partner Ruchin Goyal said while speaking at the annual Fibac event in Mumbai.
The job market in formal sector has faced challenges from the adoption of AI, with some sectors like I-T already laying off a large number of people.
In case of banking, there is a decline in the net headcount growth or a reduction in the overall employee base as well, as many lenders prefer not to replace roles with newer hires due to the advent of technology.
Goyal said Indian banks will increasingly spend on technology as this is currently lower than the global banks.
With a compounded annual growth rate of 17.4 per cent, IT cost leads the pack on a jump in operating expenses over the decade to FY25, followed by non-employee operating expense at 13.2 per cent and general operating expenses at 11.7 per cent, according to the report.
It further highlighted other challenges, including growth in bank credit needed for achieving the goal of becoming a developed nation by 2047.
"Banking assets growth must outpace nominal GDP growth by 3-3.5 percentage points to power Viksit Bharat mission," the report said.
Credit growth moderated to 12 per cent in FY25 against a 9.8 per cent rise in the nominal GDP.
The consultancy's report also said that the share of new-to-credit customers in retail lending has continued to decline at about 2 per cent per annum.
Only a third of the over 100 crore Indian adults have records with credit information companies, and it will take a very long time if the additions are just 2-3 per cent, Goyal warned.
(With PTI inputs)
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