Fintech Gets AI Makeover: PhonePe Teams Up with OpenAI, Paytm Partners With Groq PhonePe earlier this week announced a collaboration with OpenAI which will allow PhonePe users to explore ChatGPT's features on the PhonePe platform.

India's over USD 100 billion fintech industry is now getting an AI makeover.

Leading the pack are PhonePe and Paytm which are embedding AI, including generative AI, to potentially unlock new streams of revenue, heightened security, and overall operational efficiency.

PhonePe earlier this week announced a collaboration with OpenAI which will allow PhonePe users to explore ChatGPT's features on the PhonePe platform. This collaboration will make ChatGPT discoverable across PhonePe's consumer app and the PhonePe For Business app.

PhonePe's ChatGPT-integration comes shortly after Paytm announced a partnership with Elon Musk's Groq. Under the partnership, Paytm and its entities will deploy GroqCloud, powered by Groq's purpose-built LPU. The company hopes the move will help achieve significantly faster, more cost-efficient and scalable AI inference compared to conventional GPU-based systems.

Paytm also noted that the integration will push its efforts towards building high-performance AI models that enhance transaction processing, risk assessment, fraud detection, and customer engagement across our platform.

Paytm also disclosed that the company has been deploying AI for purposes such as risk modelling, fraud prevention, customer onboarding and personalisation.

AI Driving Revenue Flywheel, Operational Scalability

Applications of AI are now transitioning from simple chatbots to getting deep integration into the workflows, leveraged for scaling up operations, and eventually drive the monetisation engine for an industry estimated to be worth USD 121.4 billion.

A high-end AI model allows these fintech companies to leverage the massive transactional datasets and even further refine their services to end users. Specifically for lending, this will allow even more targeted and personalised offerings to end users, and subsequently, reduce NPAs and up the scale.

To put things into perspective, PhonePe has more than 600 million registered users while Paytm is estimated to have almost equivalent 540 million total registered users.

"Together with advanced AI like ChatGPT, we are committed to demonstrating various use cases of Consumer AI to our millions of users, thereby enriching their lives and improving AI adoption. Our users will see contextually relevant AI use cases shown throughout the apps. Use cases could include asking an AI to instantly explain a complex financial term, comparing loans , generating a grocery list, making a travel itinerary etc. For the 'PhonePe For Business' app, AI will similarly provide business owners with support for use cases such as understanding the GST filing process, ideas to grow their business etc," a PhonePe spokesperson told Entrepreneur India.

Krupesh Bhat, Founder & CEO at Melento, said to Entrepreneur India that the generative AI and ML are reshaping the underlying engines of fintech. The biggest impact isn't in interfaces — it's deep inside payment rails, reconciliation layers, and documentation-heavy workflows, according to Bhat.

"Models now auto-extract, auto-verify, and auto-correct data before it reaches a human, reducing failures and compressing back-office latency. Lenders are moving from hours to minutes, and brokers are eliminating entire error-correction loops. GenAI is replacing fragmented processes with intelligent, self-improving workflows that learn from every transaction, become more reliable with scale, and turn operational efficiency into strategic advantage," Bhat added.

Moreover, AI-led underwriting is expanding financial inclusion by moving beyond thin credit files. Instead of relying solely on bureau data, new models are being incorporated by banks such as transaction histories, income stability, spending patterns, bill payments, and digital activity to assess repayment behaviour. This opens access for underserved or "credit-invisible" individuals who previously had no path to formal credit.

For lenders, it creates higher-quality portfolios built on multidimensional insights rather than single-score snapshots. Creditworthiness is evolving from a static indicator to a dynamic understanding of a person's financial reality.

Aditya Agarwal, co-founder of wealth management platform Wealthy.in, further breaks it down with applications that have been embedded in AI.

Agarwal disclosed that his company has embedded AI into their customer journey, distributor workflows, and internal operations. According to the cofounder, onboarding has become much better now with AI integration. In the pre-AI era, a customer's KYC verification typically took 24–72 hours to update at the central registrar.

"With our AI-led document verification and real-time integration with registrars, this process is now near-instant. This single change alone has improved customer activation speed by over 90%. Internally, we've automated a significant part of our support operations by building AI agents that can read tickets, pull context, inspect backend logs, and even run diagnostic code. Earlier, these tickets had to be escalated manually to engineers. Since introducing AI, our ticket resolution efficiency has improved by 70%, and engineers now spend their time on core product work rather than routine debugging," said Agarwal.

AI powered Fraud detection, risk profiling, and more

With deeper AI integration and contextual queries, fintech companies now have the opportunity to deliver a new user experience. Moreover, there are additional benefits for both end customers and companies, especially in the areas of fraud detection, risk profiling, and other security aspects.

On fraud detection, Bhat of Melento explains that traditional fraud systems lean on static rules, but attackers exploit dynamism.

"We are seeing some of the leading banks adopt modern AI which uses real-time, network-aware techniques: graph-based anomaly detection, deep embedding models, and sequence learning that detect fraud as evolving relationships, not isolated events," he said.

"These methods uncover synthetic identities, mule networks, and micro-laundering patterns that rule-based engines miss. The breakthrough is structural intelligence — models that learn from millions of transactions, adapt instantly, and detect shifts before damage occurs. Fraud prevention is moving from reactive checks to continuous, predictive defence, he added.

On security and compliance, the PhonePe spokesperson explained, "We prioritize the security and privacy of our users above all else. Any new feature, including our collaboration with ChatGPT, adheres to our strict security standards and relevant compliance frameworks. We are committed to protecting user information. For more detailed information on our data protection practices, please refer to the official Privacy Policy available on our website."

More AI in the Future

It's evident that fintech companies are now keen on integrating AI in their workflows. According to Grand View Research, the global AI in fintech market size was around USD 9.45 billion in 2021 and is predicted to cross USD 40 billion by 2030, growing at a CAGR of 16.5%. This suggests there's ample scope for AI firms as well as fintech firms to explore new avenues.

Back in India, apart from Paytm and PhonePe, there are other new-age companies that are experimenting with slightly different models, leveraging generative AI. For consumers, a lot of AI integration may not be visible to them, but they can leverage things like GenAI for more contextual queries and a better understanding of finance-related products.