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Machines and minds: How AI is already transforming four key sectors in India
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7 min read | Updated on May 16, 2024, 16:53 IST
SUMMARY
A 2023 IBM study indicates that AI adoption is rising in India. In this report, we examine the potential of generative AI across four key sectors - where AI implementation is picking up. We also highlight some choices investors have, if they want to participate in this phenomenon.
According to a study, generative AI could boost the national GDP by $359-438 billion by 2030.
As per the IBM Global AI Adoption Index 2023 report, in India:
- 27% of surveyed organisations are actively pursuing AI technology
- 60% of IT employees say their company is implementing generative AI
- 74% of IT employees say their organisation has increased AI investments
An EY study suggests that generative AI could boost India's GDP by $359-438 billion by 2030. Over seven years, the cumulative impact could reach $1.2-1.5 trillion, adding 0.9-1.1% to annual growth
That said, despite all the noise around AI, revenue contribution from AI or related products and services, in India, is still minimal. As such, our goal here is to help build and expand know-how on current AI developments.
Why is this critical?
For anyone looking to “ride this wave”, understanding areas where AI has a major impact and higher utilisation will help identify potential investment opportunities, as they arise.
This article explores the potential of generative AI across 4 key sectors: banking, retail, healthcare, and media & entertainment (M&E). We also look at some of the choices investors have, if they want to participate in this phenomenon. Although, as we mentioned, the revenue contribution is still minimal across the chosen universe.
Let’s start with the banking sector
Generative AI: A boon for the Indian banking sector
A study by Accenture suggests that globally banks are likely to benefit more from generative AI than any other industry. Their analysis of operational efficiency indicates a potential to boost productivity by 22-30%. Below we have listed some applications of AI in Indian banking.
Benefits of generative AI in banking: Applications in top and select Indian banks
| Bank | AI Utilisation | Impact |
|---|---|---|
| SBI | -Fraud detection & prevention -Chatbots for customer support - Loan & credit decisions -Risk management -Regulatory compliance -Sales & cross-selling -Process automation | - Improved security -Enhanced customer experience -More informed lending decisions -Reduced risks -Efficient operations -Increased revenue -Improved efficiency |
| HDFC | -Data Lake & Data Warehouse for data consolidation -Chatbots for customer support -AI-powered loan & credit assessment -Machine learning for sales & cross-selling opportunities - Robotic process automation (RPA) | -Improved data management -Enhanced customer experience - Faster & more accurate loan decisions -Increased revenue generation -Improved operational efficiency |
| ICICI | -Digital document processing -Pre-approved loan limits - Digital relationship managers (human & AI) -‘iLens’ platform for mortgage lending - ‘InstaBIZ’ app for business banking - Co-branded credit cards | -Faster loan processing - Improved customer experience -24/7 customer service -Streamlined mortgage lending - Increased access to banking services for businesses -Targeted marketing & promotions |
Source: Company reports, press releases
Generative AI: Transforming the retail experience
As per EY, generative AI could potentially increase India's retail sector profitability by 20% by 2025. Even small retailers can leverage generative AI tools for hyper-local personalisation, making India a potential hub for generative AI retail solutions.
Generative AI impact in retail: Applications in Indian retailers
| Retailer | AI application and utilisation | Benefit |
|---|---|---|
| Pantaloons (ABFRL) | Algonomy's personalisation suite | -Tailored omnichannel experiences for customers -Complete-the-look recommendations -Product suggestions based on past purchases, regional trends, and local festivals |
| Nykaa | Verloop.io's customer support automation platform | -Automates repetitive customer support tasks -Improves post-purchase satisfaction and customer loyalty |
| Bata | Agrex.ai's video analytics solution | -Boosts in-store sales and customer satisfaction -Analyses customer emotions towards products through "Emotions Charts" -Enables data-driven merchandise placement |
| Blackberry | Capillary Technologies' Engage and platform | -Creates targeted marketing campaigns - Select optimal communication channels for each customer -Automates customer engagement across the purchase cycle |
| Tata Cliq | Vue.ai's Personalisation Suite | -Personalised product discovery for shoppers -Uses image recognition and data science to recommend relevant products - Improves customer experience, and conversions, and reduces costs |
Source: Company reports, press releases
Generative AI: A game-changer for Indian healthcare
India currently has about ~64 doctors available per 1,00,000 people compared to the global average of 150, as such technology and specifically AI has potential to make a significant impact.
How generative AI impacts every step of the healthcare journey: Applications in healthcare
| Company | AI utilisation | Impact |
|---|---|---|
| Tricog | Analyses ECG & Echocardiogram reports | Faster, more accurate diagnosis of heart issues |
| Niramai | Thermalytix for early breast cancer detection | Early detection of breast cancer through non-invasive screening |
| PharmEasy | Real-time data analysis & communication | Improved user experience and efficient communication |
| Qure.ai | Faster, more affordable medical diagnosis | Faster, more affordable medical diagnosis |
| HealthifyMe | Tracks calories, provides diet recommendations | Personalised health coaching and improved wellness |
Source: Company reports, press releases
Generative AI: Revolutionising Storytelling in 2024 and Beyond
The global Generative AI market in M&E is expected to reach USD 107.1 bn by 2032, growing at a 23.5% CAGR. Gen AI can reshape the M&E landscape, by bolstering personalized and immersive experiences.
AI applications in media and entertainment companies
| Company | AI Utilisation | Impact |
|---|---|---|
| ZEE 5 | Generative AI for scriptwriting | Assist content creators, improve content creation efficiency |
| Disney+ Hotstar | Auto-scaling for handling traffic spikes | Accommodate unpredictable traffic patterns |
| Netflix | Script analyser for content creation | Improve content quality |
Source: Company reports, press releases
With the multiple uses of AI already established, we now look at potential investment opportunities. Unfortunately, as we highlighted right at the start, AI does not contribute meaningfully to revenues of companies in the listed space. As such, in the table below, we look at some of the key technology companies that are taking active steps to capitalize on this current trend.
Within the listed space, there are currently no pure-play AI entities
| Company | Market cap (INR Cr.)* | Service provided | Projects / Initiatives |
|---|---|---|---|
| Oracle Financial Services | 66,394 | Software solutions for banking and finance | Launched Oracle Cloud Infrastructure Generative AI service, a managed offering to leverage LLM |
| Persistent Systems Ltd | 52,198 | Global software solutions | Launched SASVA, for Faster Software Development. Leverages AI to accelerate software releases |
| Tata Elxsi Ltd | 44,337 | Design and technology services | Partnered with IISc to develop cutting-edge automotive cybersecurity solution |
| Cyient Ltd | 19,882 | Technology & engineering solutions | Cyient and Microsoft establish a CoE named EnGeneer, leveraging Generative AI to boost engineering innovation |
| Affle India | 15,194 | Technology platform | Filed 15 patents for advanced AI, including generative AI agents, personalization, and privacy-focused security |
Source: Company reports, press releases, screener; Market cap is as on May 8, 2024
Conclusion
Generative AI presents an opportunity for Indian businesses to unlock exponential growth and solidify their position in the global marketplace. By strategically adopting generative AI and navigating potential risks, Indian enterprises can revolutionise customer experiences, optimise operations, and fuel innovation across diverse sectors. This technology has the potential to be a game-changer for India's economic future.
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