AI's Promise and Peril in Indian Banking: What it Can and Cannot Fix

• AI can significantly enhance Indian banking by improving customer service through multilingual interfaces, making banking more accessible for first-time and rural users.
• Fraud detection is a key area where AI can help combat sophisticated cybercrime networks by identifying anomalies and anticipating scam typologies, thus building trust in digital transactions.
• AI offers potential for financial inclusion by expanding credit access to informal sectors, gig workers, and women through alternative data models, moving beyond traditional collateral-based lending.
• However, AI cannot solve institutional problems like misaligned incentives, weak accountability, and the crisis of grievance redressal, which are deeply rooted in the banking system.
• AI also cannot substitute for cybersecurity prevention by design, address dependence on foreign tech infrastructure, or build consumer confidence, which relies on transparency, fairness, and trust.