Indian Banks Shift from AI Experimentation to Scale, Focus on Credit, Productivity and Risk

Indian banks are moving from experimenting with generative artificial intelligence (GenAI) to deploying it across core operations, according to a report released by FICCI, Boston Consulting Group (BCG) and the Indian Banks Association at FIBAC 2026. The report identifies four major priorities for the banking sector: expanding access to credit, improving productivity, strengthening risk capabilities and increasing AI-led customer engagement.  

The report highlights agentic AI as a major opportunity in the credit process. Banks could use AI agents across activities such as application processing, identity verification, credit assessment, fraud detection, collateral verification, sanction and disbursement. According to the report, this could potentially reduce credit turnaround times by 50-90 per cent while improving processing accuracy.  

AI is also being used to automate repetitive tasks and support relationship managers with customer recommendations, personalised campaigns, early-warning alerts and collections. However, the report notes that wider adoption continues to face challenges, including data and infrastructure readiness, shortage of skills, regulatory and governance concerns, and uncertainty around returns.  

The development shows that the next stage of AI adoption in Indian banking is likely to focus less on isolated pilots and more on integrating AI into everyday banking operations. At the same time, stronger governance, cybersecurity, risk controls and operational resilience will remain important as banks increasingly depend on AI systems. 

Source: Indian banks shift from AI experimentation to scale, focus on credit, productivity and risk | INDIA GAZETTE 

News of the Week: 

1. Japan Eyes Using Cutting-Edge AI Under Pre-Emptive Cyber Defence Policy 

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Japan is considering the use of cutting-edge artificial intelligence systems as part of its pre-emptive cyber defence policy. The move comes amid growing concerns that increasingly capable AI systems could be used to support sophisticated cyberattacks. At the same time, Japan is exploring how advanced AI could strengthen its ability to detect vulnerabilities, analyse threats and respond to cyber incidents. The policy could allow authorities to use AI tools to identify potential threats before they develop into serious attacks. 

The development reflects the growing importance of artificial intelligence in national security and cybersecurity policy. As AI systems become more capable, governments are assessing both the risks they create and their potential use in strengthening cyber defence. Japan's approach highlights the dual-use nature of AI, where the same technologies can potentially be used by attackers and defenders. It also raises wider questions around human oversight, accountability and the responsible use of AI in national security. The move shows how AI governance is becoming increasingly connected with cybersecurity, defence preparedness and technological sovereignty, particularly as governments prepare for more complex digital threats. 

Source: Japan eyes using cutting-edge AI under pre-emptive cyber defence policy | The Mainichi

2. Taiwan Says It Was Targeted Last Month in AI-Driven Hacking Campaign 

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Taiwan detected AI-assisted cyberattacks targeting government agencies in July, with the attacks originating from overseas, according to its Ministry of Digital Affairs. The affected agencies were able to handle the incidents, while cybersecurity monitoring teams detected the attacks and issued warnings during the investigation. Officials said the campaign involved a combination of conventional hacking methods and AI-agent-assisted techniques, showing how artificial intelligence is increasingly being incorporated into cyber operations.  

The development highlights the growing cybersecurity risks associated with increasingly capable AI systems. AI tools can potentially help attackers identify vulnerabilities, automate parts of an attack and operate more efficiently, while also creating new challenges for traditional cybersecurity measures. Taiwan's experience reflects a wider concern among governments about the use of AI in cyberattacks against public institutions and critical systems. The incident also demonstrates the importance of strengthening cybersecurity monitoring, threat detection and response capabilities as AI-enabled attacks become more sophisticated. It further raises broader questions around responsible AI use, national security and the need for governments to prepare for emerging forms of AI-assisted cyber threats. 

Source: Taiwan says it was targeted last month in AI-driven hacking campaign | Reuters 

3. Robotics and Physical AI-Securing EU Market Access After Digital Omnibus AI 

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The European Union's Digital Omnibus on AI is changing how AI-enabled products, including robotics and other forms of physical AI, will access the EU market. The framework seeks to simplify overlapping regulatory requirements while continuing to address risks linked to physical safety, cybersecurity, privacy and fundamental rights. The changes are particularly relevant for industrial manufacturers developing AI-enabled machinery, autonomous systems and other products that can perceive, make decisions or act in the physical world.  

The development reflects the EU's effort to balance regulatory compliance with technological innovation and market competitiveness. Under the new framework, high-risk AI embedded in machinery will increasingly be addressed through sector-specific product safety rules, including the Machinery Regulation, with further requirements expected through delegated acts. At the same time, manufacturers will need to consider cybersecurity obligations under the Cyber Resilience Act alongside AI-related requirements. The changes demonstrate the EU's move towards a more coordinated and sector-based approach to governing physical AI, while maintaining safeguards for safety, security and fundamental rights.  

Source: Robotics and physical AI — Securing EU market access after the Digital Omnibus on AI | Reuters 

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