By Siddhi Nayak and Sidhartha Shukla
India spent the past decade transforming how money moves, with its home-grown real-time payments system changing the way millions of people pay. Now, it is preparing for a bigger leap as artificial intelligence reshapes finance.
AI could take India’s financial system beyond simply processing transactions, helping assess borrowers, detect fraud, tailor financial products and eventually make payments on behalf of consumers. But giving machines such a big role increases risks of bias, fraud, cybersecurity, data privacy and accountability.
Those questions will take center stage at the annual Global Fintech Fest in Mumbai, where policymakers, bankers, technology companies and fintech founders will gather to debate what comes after the Unified Payments Interface, which unleashed a digital-payments revolution.
The conference, running from Sept. 8-11, will evaluate the potential impact of agentic AI, alongside tokenization and quantum technology. Prime Minister Narendra Modi will deliver the opening keynote Tuesday, with Finance Minister Nirmala Sitharaman, Reserve Bank of India Governor Sanjay Malhotra and Securities and Exchange Board of India Chairperson Tuhin Kanta Pandey among the key speakers during the conference.
The timing is significant. UPI has grown from a government-backed experiment into the backbone of India’s retail-payments system, processing 24.51 billion transactions worth about 29.82 trillion rupees ($315 billion) in August alone.
India’s demographics offer further edge. More than 65% of its population is under 35, giving the country a large pool of digitally savvy workers and consumers who could help build and quickly adopt new AI products.
“We are very, very bullish on India as a market,” said Rishi Chhabra, managing director and country manager at Visa Inc. “India has a younger population that’s growing and digital adoption needs in India are completely changing. It leapfrogs when it comes to commerce and payments.”
Banks are already using AI agents to automate operations and customer service, while algorithms help monitor risk, detect fraud and assess borrowers. Wider use of AI across operations and governance could sharply cut costs by improving efficiency, said Vivek Iyer, a partner at Grant Thornton Bharat.
But giving AI greater autonomy also creates new points of failure, from faulty decisions and biased models to cyberattacks and disputes over who is responsible when an AI agent makes a bad payment or financial decision.
Globally, regulators are wrestling with whether existing rules are enough for a financial system where algorithms can increasingly act with limited human oversight.
For the RBI too, the dilemma is to encourage innovation without allowing technology to outrun the safeguards around it. Malhotra and RBI Deputy Governors Shirish Chandra Murmu and Rohit Jain are expected to outline the central bank’s view on how it plans to navigate this challenge during the conference.
Beyond AI, the conference will revisit an older question that UPI has made harder to ignore about who pays for the infrastructure behind India’s online payments boom.
UPI transactions have been exempt from merchant discount rate charges since 2020, limiting the revenue banks and payment companies can earn directly from them. The government is now considering allowing charges on transactions routed through UPI.
UPI solved the coordination problem by getting every bank, app and merchant to speak one language, said Nitin Sharma, founding partner at early-stage venture capital firm Antler India. “But rails themselves cannot underwrite.”
India’s next phase of digital finance will therefore have to solve two problems at once — how to make payments and banking smart enough to act with greater autonomy, and how to build a sustainable business model around the infrastructure that makes it possible.