Nine Of 10 Indian Financial Institutions Focusing On AI, Gen AI For Innovation: PwC India

Ninety per cent of Indian financial institutions are focusing on artificial intelligence and generative AI as the primary technology enablers of innovation, according to a PwC India report. Around 74% of survey respondents also cited data analytics, highlighting the technology's role in driving insights and decision-making within the financial services sector.

The report—Mapping the FinTech Innovation Landscape in India—was based on a survey of 31 financial institutions consisting of banks, insurance firms and fintechs.

Of the respondents, 84% stated that customer experience and engagement—acquisition, onboarding and servicing—was the key area of focus for innovation initiatives. Additionally, 50% of the participants highlighted product distribution as a key area of innovation.

Frequent references to risk management, operations and regulatory compliance across several responses highlighted the sector's diligence in maintaining robust governance frameworks amid ongoing technological advancements.

"As the fintech industry continues to evolve, it's clear that growth must be balanced with the critical challenges of digital security and regulatory compliance," said Mihir Gandhi, partner and payments transformation leader, PwC India. "Fintech companies need to navigate an ever-changing regulatory landscape while building compliant partnerships to ensure sustainable success."

"The focus is shifting towards profitability and long-term viability, emphasising the importance of changing business models, innovation and customer focus," Gandhi added.

According to the report, 65% of respondents considered risk mitigation and adapting to changing regulatory landscapes as important factors, underscoring the importance of navigating regulatory challenges while innovating. Also, 45% preferred to promote innovation primarily through internal initiatives, indicating a preference for using internal resources and expertise to drive innovation.

The most common objectives that companies chose for collaborating and partnering were better speed-to-market and collaborative innovation, according to the report.

"Collaborative innovation is now seen as a key driver for fintechs, enabling faster speed-to-market and delivering tangible benefits like new product offerings, increased productivity and reduced operational costs," said Vivek Belgavi, partner and leader, fintech, alliances and ecosystems, PwC India.

The primary challenges most surveyed companies encountered while running their innovation initiatives were resource constraints, particularly talent and the technological complexity associated with new technologies. The report also noted that 58% of respondents did not have a separate vertical or business unit for managing their innovations.

(With inputs from PTI)