Leveraging Artificial Intelligence to enhance customer service in cooperative banks in India

Abstract

This study examines the use of Artificial Intelligence (AI) to improve customer service in cooperative banks in India, which play a vital role in promoting financial inclusion in rural and semi-urban areas. While AI adoption is growing rapidly in private and commercial banks, cooperative banks face challenges such as limited technology infrastructure, financial constraints, and lower digital literacy among customers.

Using a mixed-methods approach, the study surveyed 50 customers and staff of cooperative banks and conducted interviews with banking professionals and policymakers. Results show moderate awareness and usage of AI tools like chatbots and virtual assistants, with mixed perceptions about their usefulness and ease of use. AI is recognized for improving service speed and personalization; however, many customers still prefer human interaction for complex or sensitive issues. Key barriers to adoption include language diversity, data privacy concerns, and resistance to technological change.

The findings support the Technology Acceptance Model (TAM), confirming that perceived usefulness and ease of use significantly influence customer satisfaction with AI services. The study recommends cooperative banks develop multilingual AI tools, strengthen data security, adopt hybrid human-AI service models, and invest in digital literacy programs tailored to their unique customer base. These insights provide practical guidance for policymakers, cooperative banks, and technology providers to modernize customer service while addressing the sector’s specific challenges.