At the same time, the sector is being reshaped by payment modernisation, data-driven decision-making, capital market activity and technology-enabled risk management. Organisations across banking, insurance, capital markets, private equity and asset management are investing in digital capabilities, strengthening customer data protection frameworks and leveraging AI to improve efficiency, fraud detection and operational performance. As regulatory expectations increase and market dynamics evolve, agility, innovation and trust are becoming critical differentiators.
Financial transformation through trust and technology
India’s financial services sector is undergoing a period of significant transformation, driven by digital innovation, evolving regulatory expectations and changing customer behaviours. Financial institutions are increasingly focused on enhancing resilience, strengthening trust and delivering seamless customer experiences while navigating a rapidly evolving landscape shaped by AI, data, cyber security and emerging business models. As the sector continues to modernise, organisations are balancing growth ambitions with risk management, governance and long-term value creation.
Key trends shaping financial services landscape
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India Union Budget 2026-27: Our Sector Insights
India Union Budget 2026-27 Financial Services PoV
Banking is key to ensure success of budget by ensuring credit in the right direction, should bring clarity on foreign investment
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Union Budget 2026 adopts a measured, credible, and PFM-aligned strategy to place India’s public finances on a stronger and more sustainable trajectory
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Driving growth with Financial Services
- India International FinTech Festival 2026
- The next era of AI belongs to trust
- Beyond digital infrastructure
- RBI advisory on AI-ACT&RS
- Implications of the RBI's ACPIR framework
- Navigating the next wave of financial reporting and transfer pricing developments
- Enabling future decisions with data-driven finance
- Disciplined deployment and long-term returns
- RBI Investment Portfolio Amendments, 2026
- RBI ACPIR and SA-CR Directions, 2026
- Regulations address systemic risk at the source
- The move to AI-first banking starts with steady steps
- Hemant Jhajharia
- Atul Gupta
- Vishnu Pillai
- Vaibhav Pachori
India's fintech story over the past decade has been one of building trust at population scale. As financial institutions gain access to increasingly rich streams of transaction, identity and behavioural data, AI is emerging as the intelligence layer that transform information into insight, insight into decisions and decisions into action.
Looking ahead, India's opportunity extends beyond the adoption of AI technologies to building a financial ecosystem that is more inclusive, resilient and globally competitive.
Vaibhav Pachori
Partner, Cyber Strategy & Governance
KPMG in India
As AI becomes embedded in credit decisions, fraud detection, payments, customer engagement, and financial inclusion, the conversation highlighted a few powerful themes:
- AI is rapidly becoming part of the financial system's critical infrastructure, making resilience and security a national priority.
- Cybersecurity must evolve beyond protecting data to protecting algorithms, models, and AI-driven decisions.
- Deepfakes, synthetic identities, and adversarial AI are redefining the threat landscape, requiring stronger digital identity and trust frameworks.
- Innovation and regulation must move together. Governance, transparency, and accountability can no longer be afterthoughts.
- Trust remains the ultimate currency. Citizens do not need to understand every algorithm, but they must have confidence that AI-driven decisions are fair, secure, and accountable.
India has a unique opportunity to demonstrate that innovation, cybersecurity, privacy, and public trust are not competing priorities, but mutually reinforcing foundations of a resilient digital economy.
As we build the AI economy, one message stood out above all: Trust should be our greatest asset, not our biggest vulnerability.
The next era of AI won't belong to those running the most experiments. It will belong to those who build trust into execution, ensuring technology amplifies human judgment where it matters most.
- Hemant Jhajharia
- Akhilesh Tuteja
India's fintech story over the past decade has been one of building trust at population scale. As financial institutions gain access to increasingly rich streams of transaction, identity and behavioural data, AI is emerging as the intelligence layer that transform information into insight, insight into decisions and decisions into action.
Looking ahead, India's opportunity extends beyond the adoption of AI technologies to building a financial ecosystem that is more inclusive, resilient and globally competitive.
India has built a robust digital finance ecosystem powered by Digital public infrastructure, widespread digital adoption, progressive regulatory frameworks and a thriving culture of innovation. As this ecosystem continues to evolve, AI is emerging as the next transformative force, enabling smarter decisions, adaptive experiences and more autonomous financial operations.
India's next phase of fintech leadership is likely to be defined not by digital infrastructure alone, but by how effectively intelligence is embedded across the ecosystem.
While, businesses are experiencing meaningful value from AI, most are concerned about data security, privacy and AI induced risks.
Recent RBI advisories rightly focuses on the two important aspects:
- Having strong governance for responsible and safe use of AI and
- Strengthening capabilities against AI accelerated cyberattacks.
- Rajosik Banerjee
- Amitava Mukherjee
- Somdeb Sengupta
- Venkateswaran Narayanan
The true impact of ECL goes far beyond finance and accounting. It will reshape business models, ICAAP, ALM, portfolio strategy, and regulatory compliance, compelling banks to embed risk thinking into every layer of decision-making.
The new regulations should not be looked as mere change in provisioning norms - it gives financial institutions a powerful tool for forward looking decision making. Making informed choices at every stage of customer lifecycle - origination to collections as well as nuanced portfolio strategy can give banks real competitive advantage.
Venkateswaran Narayanan
Partner, Finance Advisory
KPMG in India
After a decade of submitting proforma Ind AS financial statements to the Reserve Bank of India (RBI), banks in India are set to implement ECL & EIR from FY 2027-28. The implementation of ECL & EIR presents the opportunity to harmonise financial, risk & regulatory reporting in the areas of provisioning, credit risk management & periodic regulatory submissions. The implementation is expected to have a lot of rigor in the areas of data, process & governance as these will be subject to audit.
- Rahul Chandran
- Ratheen Baxi
Rahul Chandran
Partner, Finance Advisory
KPMG in India
As India prepares to align with the global reporting landscape through Ind AS 118, mirroring the principles of IFRS 18, finance leaders are gearing up for one of the most significant changes to financial reporting in recent years. It is imperative for organisations to revisit their chart of accounts, financial statement presentation, performance measures, and reporting governance frameworks.
It is also crucial to explore the impact on close, consolidation, planning, and external reporting processes, as well as the role of technology and data in enabling compliance. As organisations prepare for adoption, success will depend on collaboration across finance, business and technology functions.. The transition to IFRS 18 / Ind AS 118 is not just about compliance - it is an opportunity to enhance transparency, consistency, and the quality of financial reporting.
Ratheen Baxi
Partner, Finance Advisory
KPMG in India
As organisations adapt to changing regulatory requirements, the focus is not only on accounting and disclosures but also on the technology that enables effective financial reporting. This is a timely moment for organisations to evaluate dedicated financial statement preparation and reporting tools.
Some of the commonly used reporting solutions in India consist of features such as consolidation assistance, workflow management, audit trails, and seamless integration with source systems. These tools can reduce manual effort, strengthen governance, improve reporting accuracy, and accelerate the financial statement preparation process. As reporting requirements continue to evolve, technology is becoming a critical enabler of a more efficient controlled, and future-ready finance function.
The finance function is undergoing a fundamental shift from reporting past performance to enabling future decisions. Cloud platforms, AI, and data-driven insights are helping organisations accelerate financial close, strengthen governance, improve spend visibility, and support more informed decision-making. As businesses continue to navigate growth and market uncertainty, building an intelligent and connected finance organisation will be critical to driving agility, resilience, and long-term value creation.
In an environment marked by persistent uncertainty and heightened scrutiny on returns, private equity and asset management firms are increasingly focused on disciplined capital deployment and driving tangible value from existing portfolios tangible value from existing portfolios.
In India, strong underlying growth, deepening private markets and sustained investor interest continue to create opportunities, even as firms remain selective in their investment approach. The ability to combine sector expertise, operational transformation and AI-led insights will be critical to unlocking value, navigating market cycles and delivering consistent, long-term returns.
RBI has amended the Investment Portfolio Directions to align banks’ investment books with the new ECL & EIR framework, effective 1 April 2027.
Key shifts:
- HTM & AFS (debt) brought under Stage‑wise ECL provisioning
- Mandatory use of Effective Interest Rate (EIR) and amortised cost
- Fair value reset on 31‑Mar‑2027, with transition impact routed to reserves (not P&L)
- Stronger linkage between NPAs and NPIs and tighter income recognition for Stage 3
Key note: Entire investment will be carried on EIR effective April 2027, unlike in the case of existing loan portfolio, transition to EIR extended till Mar 2030. However new loans will be on EIR from April 2027
Net effect: A decisive move towards credit‑risk‑sensitive accounting, aligning loan and investment books under a common prudential framework.
Regulations address systemic risk at the source. For state government loans, norms hinge on exposure and capital adequacy. Guarantees ease exposure limits but still require capital. The NBFC draft is unlikely to change outcomes in the near to mid term.
The shift to AI-first banking will not happen overnight. It is a steady reimagining of how banks operate and create value.
We are already seeing banks move beyond basic automation toward enterprise-wide AI adoption.
But strategic judgement will remain firmly human. Wherever judgment, governance and compliance are involved, people will need to step in. Regulated environments demand accountability, and that responsibility cannot be handed over to machines
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