AI Could Reshape Half of Banking Jobs in India, Says BCG Report

Artificial intelligence (AI) could reshape up to 50% of jobs in India’s banking sector, according to a report by the Boston Consulting Group (BCG) presented at the annual FIBAC 2025 conference held in Mumbai for two days, August 25-26, 2025. The report highlights that despite a fivefold rise in IT spending over the last decade, Indian banks have achieved only 1% productivity gains, leaving them far behind global peers.

AI to Disrupt Banking Roles
The consultancy warns that Indian lenders face “sticky cost structures” and limited efficiency improvements. It’s Senior partner Ruchin Goyal noted that banks need to boldly adopt AI-driven tools to remain competitive. “We feel that about 35–50% of jobs can get reshaped if banks are able to embrace these new technologies,” he said, stressing that technology adoption will be critical to overcome challenges in productivity and workforce management.

Rising Costs, Stagnant Returns
The report reveals that IT costs grew at a CAGR (Compound Annual Growth Rate) of 17.4% over the decade to FY25, outpacing all other expense categories. Non-employee operating costs rose by 13.2%, while general expenses increased by 11.7%. However, these investments have not translated into meaningful improvements in efficiency, leaving banks under pressure to optimise cost structures.

Credit Growth Below Target
Another major concern flagged by BCG is the slow pace of credit expansion. For India to meet its Viksit Bharat 2047 development goals, banking asset growth must exceed nominal GDP growth by 3–3.5 percentage points. In FY25, credit growth was 12%, only slightly higher than the 9.8% nominal GDP growth, falling short of the required pace.

Financial Inclusion Gaps
The report also highlights gaps in credit inclusion. The share of new-to-credit customers in retail lending is shrinking by about 2% annually, raising concerns about limited access for first-time borrowers. Currently, only one-third of India’s 100+ crore adults have credit bureau records. At the present rate of 2–3% new additions per year, expanding financial access to the entire population could take decades.

Implications for Jobs and Policy
While AI adoption could streamline processes, it also raises concerns over job losses in the sector, echoing similar trends in IT and other formal industries. Many banks are avoiding replacement hiring for roles lost to technology, leading to stagnation in overall employment.

The Road Ahead
The BCG report concludes that technology investment, credit expansion, and inclusion must go hand in hand if Indian banks are to support the country’s long-term development vision. Without bold steps, the sector risks being constrained by inefficiency, rising costs, and slow financial outreach.