<p>This paper examines how artificial intelligence (AI), including generative AI, is reshaping the banking sector, with particular attention to India within a global context. Adopting a descriptive and exploratory design based exclusively on secondary data available up to September 2026, the study synthesises peer-reviewed literature with regulatory reports, supervisory surveys and industry studies from the Reserve Bank of India (RBI), the Bank of England and Financial Conduct Authority, the European Union, the Government of India&rsquo;s Economic Survey, McKinsey &amp; Company, EY, Deloitte and Evident, analysed through thematic content analysis. The evidence reveals a widening gap between global leaders and the broader industry. In the United Kingdom, 75% of financial firms already use AI, and leading banks now employ more than 90,000 AI specialists, while generative AI is estimated to offer the global banking industry US$200&ndash;340 billion in annual value. In India, by contrast, only about 21% of 612 surveyed regulated entities were using or developing AI, and although 74% of financial firms had launched generative AI proofs-of-concept, only 11% had reached production. Opportunities lie in fraud detection, credit underwriting, customer service and operational productivity, with projected gains of up to 46% in Indian banking operations by 2030. Strategic challenges include model risk and explainability, data quality and privacy, AI-enabled fraud and deepfakes, third-party concentration, workforce disruption and evolving regulation, illustrated by the RBI&rsquo;s FREE-AI framework and its 2026 draft guidance on model risk management. The paper concludes that sustainable value from AI in banking depends on governance, trust and human oversight as much as on technology.</p>