Indian Bank’s managing director warns of increasing disguised unemployment as technology enhances efficiency, with AI playing a crucial role in transforming staffing and operational practices across the sector.
Indian Bank managing director and chief executive Binod Kumar has warned that a form of “disguised unemployment” is creeping into banking as the gains from older IT systems begin to level off. Speaking in comments reported by ETBFSI and several other Indian business publications, Kumar said technology had shifted many tasks away from branches and into back offices, but staffing levels have not fallen as much as the efficiency boost would suggest.
Kumar said the debate over technology and jobs in banking is not new. He recalled the resistance that accompanied the introduction of IT systems in the sector around 1994, when employees feared automation would destroy roles. Over time, however, he argued that banks have still extracted meaningful productivity gains: balance sheets at large lenders have expanded sharply over the past six years, while headcount has broadly stayed flat or fallen. The implication, he said, is that digital tools have already helped banks do more with less.
That trend is visible at several large private sector lenders. Recent annual disclosures show that HDFC Bank, ICICI Bank, Axis Bank and Kotak Mahindra Bank all reduced permanent staff over the year to March 31, 2026, even as their businesses continued to grow. ICICI Bank reported the steepest fall among the four, while Kotak Mahindra Bank posted the smallest decline. Indian Bank’s chief said such figures underline both the progress already made and the scope for further change.
Kumar said Indian Bank is planning to invest ₹2,000 crore in technology and wants to ensure that spending translates into better use of staff time. He pointed out that branch traffic has thinned and that activity tends to be uneven through the day, leaving room to redeploy employees more effectively. In his view, artificial intelligence could help fill those gaps by improving efficiency, customer service, revenue generation and cost control at the same time.
The bank is already using AI in customer grievance handling, risk management and collections, Kumar said. He said about 85% of complaints are being resolved at first contact, while AI-assisted collections have helped bring the bank’s special mention account book, a measure of early stress in loan accounts, down from 16% to below 4%. He said those results show that AI is moving beyond a simple automation tool and becoming part of credit decisions, service quality and recovery work.
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