From Bots to Blockchain: How 2025 Is Reshaping Indian Banking with AI, Digital-Only Models

Earlier this year, Tata AIA Life's chatbot, “Tasha,” crossed an impressive milestone. It handled over 7.5 million customer queries with a 98% success rate, without needing a human helping hand. Around the same time, Bajaj Finance reported saving ₹150 crore annually, thanks to its AI-powered bots managing everything from customer service to loan collections.

These aren’t just isolated stories. They represent a significant shift taking place in Indian banking. In 2025, artificial intelligence, generative AI, and smarter cybersecurity systems have moved from being optional upgrades to becoming central to how banks choose to think, serve, and grow.

GenAI Finds Its Footing

A recent report by EY India estimates that Indian banking could see productivity gains of up to 46 percent by 2030, with much of that is likely to come from the adoption of GenAI. This year alone, 74 percent of financial services firms in India already have GenAI projects underway. Nearly half have set aside formal budgets for it.

The most common use cases remain in customer support and backend automation. But a new layer is emerging. Banks are using GenAI for onboarding, regulatory compliance, and even early-stage fraud detection.

Smarter Cybersecurity, Riskier Landscape

The rise of AI has its own share of challenges. As digital adoption deepens, the need for smarter, more responsive cybersecurity has grown automatically. In June, the Reserve Bank of India issued a new advisory urging banks to strengthen their cyber defenses with AI-aware strategies. The RBI also flagged concerns around third-party vendors and the emerging risk of deepfakes in identity verification.

Google has launched a dedicated initiative in India aimed at helping prevent cybercrimes worth over ₹20,000 crore this year. The focus is on real-time fraud detection across UPI platforms and phishing attempts that target ordinary users.

Meanwhile, Indian cybersecurity startups like Vastav AI are stepping in with tools to detect synthetic identities and biometric fraud. These are the threats that are becoming commonplace in video KYC and digital onboarding.

Digital-Only Banks Are Finding Their Moment

Another big shift in 2025 has been the quiet rise of digital-only banking. Neobanks are expanding rapidly, especially in Tier 2 and Tier 3 cities. These banks don’t operate traditional branches. Instead, they offer voice-based UPI transactions, multilingual chat interfaces, and AI-driven financial advice, all through a smartphone.

What’s Coming in 2026

As we look ahead to 2026, it looks likely that many of the trends discussed above will begin to scale and mature. Industry analysts expect:

 Voice and visual AI interfaces to become the new norm for retail banking

 Blockchain-enabled cross-border payments to gain traction through the Digital Rupee.

 A surge in fintech-bank collaborations, particularly in the insurance and wealth management space.

 AI-assisted internal audits and real-time compliance tools to become more mainstream

But the road ahead isn’t without its bumps.

Questions around data privacy, algorithmic bias, and regulatory oversight are growing louder. The sector will need to balance rapid innovation with strong governance.

In a year when global markets are slowing and growth feels harder to come by, India’s tech-driven financial sector is offering something rare. A sense of momentum. And a glimpse into what the future of banking could look like for the rest of the world.

(The writer is a seasoned Banker and Mortgage Specialist working for India’s largest loan distributor company and covers financial policy, digital services, andpublic infrastructure in India.)