The Indian banking sector is poised for a major transformation over the next decade, driven by technological innovation and structural shifts, according to a recent report by Eiara Securities titled “Future of Banking – Seven Structural Forces Shaping the Next Decade.” Key drivers identified include the integration of artificial intelligence (AI) and generative AI (GenAI), changes in deposit composition, and the democratization of credit.
Other factors expected to influence the industry between 2025 and 2035 are productivity challenges, consolidation trends, and evolving business models designed to address emerging risks such as cybersecurity threats and climate-related disruptions. The report emphasizes that the coming years will be a “fight for relevance” as banks navigate rapid industry changes. While India’s robust digital infrastructure and supportive policy environment provide a strong foundation, financial institutions must proactively manage the integration of AI technologies and mitigate operational and technological risks.
The report highlights the resilience of Indian banks over the past two decades. From 2015 to FY25, business, loan, and deposit growth rates stood at 1.7x, 1.74x, and 1.6x, respectively, surpassing growth achieved between 1951 and 2015. Despite facing significant internal challenges, such as asset quality reviews and demonetization, as well as external shocks like the COVID-19 pandemic and global financial volatility, Indian banks have demonstrated remarkable adaptability and strength.
Looking ahead, the report underscores that banks entering this transformative era must leverage technology, manage risk efficiently, and seize emerging opportunities to maintain competitiveness. The adoption of AI and GenAI is expected to enhance operational efficiency, customer engagement, and credit accessibility, while shifts in deposit structures and credit availability will require banks to rethink traditional approaches.
Ultimately, the success of Indian banks in the next decade will hinge on their ability to balance innovation with risk management, adapt to structural changes, and capitalize on the evolving landscape of financial services. Those that navigate these dynamics effectively are likely to emerge as leaders in a rapidly changing industry.
