A groundbreaking study commissioned by Experian and conducted by Forrester Consulting has unveiled a significant transformation underway in India's financial sector. The research indicates that Artificial Intelligence (AI) and Machine Learning (ML) are fundamentally reshaping how credit decisions are made, leading to wider access to loans and healthier lender portfolios.
ML Drives Growth and Reduces Risk for Indian Lenders
The findings, based on insights from 109 senior credit risk decision-makers across India, position ML as a strategic asset for growth. The technology demonstrates a powerful dual impact: fostering financial inclusion while simultaneously strengthening risk management frameworks.
The report presents compelling statistics that underscore this shift. In the vehicle loan segment, 93% of financial institutions using ML reported higher approval rates. Similarly, in the credit card business, 90% of lenders leveraging ML have successfully reduced their bad debt. Perhaps most significantly, 79% of ML adopters agree that the technology enables them to responsibly serve new customer segments, such as those with limited credit history (thin-file) or who are new to credit, who were previously often excluded by traditional scoring methods.
This strategic adoption directly benefits the bottom line, with 71% of respondents confirming that ML improves overall profitability through enhanced risk prediction capabilities.
Automation and GenAI Emerge as Key Productivity Levers
Beyond risk assessment, lenders are harnessing ML to accelerate and streamline their digital operations. The pursuit of efficiency and speed is a major driver, with nearly 68% of ML users citing improved risk prediction accuracy and operational efficiency as primary benefits.
The move towards automation is particularly strong. 71% of professionals agree that ML allows them to automate a greater number of credit decisions, thereby reducing manual workloads. Looking to the future, an overwhelming 78% of respondents believe that the majority of credit decisions will be fully automated within the next five years.
The report also highlights the rising promise of Generative AI (GenAI) as a powerful productivity tool. A significant 84% of those surveyed believe GenAI can drastically cut down the time and effort required to develop and deploy new credit risk models. Furthermore, 70% see GenAI's biggest advantage in streamlining complex regulatory documentation, which would significantly accelerate validation cycles.
Barriers to Widespread Adoption Persist
Despite the clear and proven advantages, the Experian report notes that caution within many organizations continues to create hurdles for broader ML implementation. Key barriers identified include concerns over cost, a lack of in-depth understanding of the technologies, and challenges related to regulatory compliance and existing infrastructure.
This comprehensive analysis paints a picture of an Indian lending landscape at a digital inflection point, where AI and ML are no longer futuristic concepts but essential tools for competitive growth, responsible lending, and building a more inclusive financial ecosystem.
