GenAI to contribute $66-80 bn to GVA in financial sector by 2030: EY

General Artificial Intelligence's impact on the gross value added (GVA) within the financial sector could range from 22 to 26% by the year 2030, potentially contributing an additional $66-80 billion to the GVA, according to a latest report by consultancy major Ernst & Young.

The study, ‘The AIdea of India: Generative AI’s Potential to Accelerate India’s Digital Transformation,’ reveals the financial services industry in India is currently undergoing a "transformative surge", propelled by GenAI.

Around 78% of surveyed respondents in the financial sector have either implemented GenAI in at least one use case or have plans to pilot it within the next 12 months, the report says. However, financial organisations are grappling with "increased regulatory scrutiny" related to governance and standards concerning the development of large language models.

India's robust economic growth, recognised by global institutions like the World Bank and the International Monetary Fund (IMF), positions it as the fastest-growing major economy, the EY report says, adding that India is projected to surpass Germany and Japan to become the third-largest economy by 2027.

EY's another report, 'India@100: Realising the Potential of a $26 Trillion Economy,' also forecasts that India could achieve a $26 trillion economy by 2047-48, attaining a per capita income of $15,000, which will place it among developed countries. The study suggests a substantial boost in GDP, with a potential addition of $359 billion to $438 billion in the fiscal year 2029-30, reflecting a 5.9% to 7.2% increase.

Approximately 69% of the overall economic impact is expected to derive from sectors such as business services, financial services, transportation and logistics, education, retail trade, and healthcare. The study indicates Gen AI adoption in India could significantly elevate the retail sector’s profitability by 20% by 2025.

The survey conducted by EY indicates that 84% of CEOs in India acknowledge the pressing need to swiftly embrace GenAI. However, a significant majority of Indian CEOs, comprising 80%, also recognise the challenges posed by the uncertainty surrounding Gen AI, particularly in the development and implementation of AI strategies. In India, 100% respondents are gearing up to make significant investments in Gen AI, it finds out.

In India, the healthcare sector is cautiously piloting Gen AI in controlled environments to ensure accuracy before widespread deployment, the report reveals. "Almost 60% of the survey respondents from the Healthcare and Life Sciences sector believe that Gen AI will have a very high impact on the entire value chain, making it more efficient and responsive to market dynamics."

Moreover, the government's pending Digital India Bill is expected to play a pivotal role in shaping the development landscape of Gen AI in the country.

“The government is also in the process of finalising the Digital India Bill, which could impact the development of Gen AI in India. The enactment of this law is expected to facilitate AI development, including Gen AI as it aims to ‘safeguard’ innovation in AI and other emerging technologies."