Traditional finance bets on AI and gold, dancing with the Bitcoin market: Growth strategic insights from L&T Finance

L&T Finance’s Managing Director and CEO Sudipta Roy recently announced that the company has set a growth target of 20%-25% and will maintain this goal.

The core of this strategy revolves around two major drivers: the artificial intelligence risk management system “Cyclops” and the rapidly growing personal loans, two-wheeler loans, and gold loan businesses.

01 L&T Finance Growth Engine

L&T Finance’s growth blueprint is outlined clearly and firmly. The company has established specific growth targets and built a solid strategic framework accordingly.

Roy stated that the company is betting on two-wheeler loans, personal loans, and gold loans as the main drivers to boost growth in the second half of fiscal year 2026. Behind this strategic choice is a keen insight into market trends.

He believes that GST 2.0 reforms have unleashed a large amount of suppressed demand, which could lead to significant growth in the aforementioned sectors. Market demand has indeed been strong, and the company has observed increased expenditure across all 130 branches.

L&T Finance plans to open 200 new branches by the end of the year, indicating the company’s confidence in expanding its business. The CEO even expects this segment to show a “very good momentum” in the remaining months of this year.

02 AI-Driven

Technology is reshaping every aspect of the traditional lending industry, and L&T Finance has fully embraced this transformation.

The company is implementing a risk engine called “Cyclops” across all business lines. This system has already been effective in two-wheeler, MSME, and agricultural equipment finance, and is planned to be applied to personal loans in this quarter.

According to the plan, by fiscal year 2027, this risk engine will expand into housing and rural loans. Digitalization is not only about risk management systems but also permeates all aspects of asset quality management. The company is working to make asset quality trajectories more predictable through technological means.

Roy is confident about this transformation: “We are trying to make asset quality trajectories more predictable through this.”

03 Financial Transformation

India’s lending industry is undergoing a profound change driven by artificial intelligence and data science. L&T Finance’s strategic adjustments are highly aligned with this industry trend.

According to industry reports, the size of India’s digital lending market is expected to grow from $38.2 billion in 2021 to $515 billion by 2030, with a compound annual growth rate of 33.5%.

AI’s application in loan assessment is particularly crucial. Traditional methods such as analyzing credit reports and bank statements often fail to provide complete information. AI technologies can leverage multi-dimensional data from social media, phone calls, online transactions, behavioral patterns, and psychological tests to gain a more comprehensive understanding of individual spending habits and predict repayment ability.

AI and data science are also transforming the loan issuance and recovery processes, improving efficiency and reducing human errors through digital payment methods like mobile wallets, QR codes, and unified payment interfaces.

In the gold loan sector, AI technology also plays a transformative role. AI-based tools consider multiple factors such as weight, purity, loan amount, and tenure to provide customers with information about loan amounts and interest payable monthly or annually, helping them make informed and quick decisions.

04 Market Recognition

L&T Finance’s strategic transformation and performance improvements have been recognized by major financial institutions, reflecting market confidence in its development direction.

J.P. Morgan has upgraded the company’s rating from “Reduce” to “Neutral” and significantly raised its target price from 140.00 Indian Rupees to 260.00 Indian Rupees.

The main reason for the rating upgrade is the company’s successful management of asset quality pressures related to its microfinance portfolio. This portfolio accounted for 29% of its book a year ago and has now decreased to 26%.

J.P. Morgan pointed out that as pressure levels normalize and the growth outlook for two-wheelers and passenger cars improves post-tax cuts, L&T Finance will benefit. The firm also emphasized how L&T Finance effectively utilizes technology for credit approval through the Cyclops credit engine, which has led to a significant improvement in early delinquencies.

05 Parallel Narratives in the Cryptocurrency Market

While traditional financial companies leverage AI to optimize lending operations, the cryptocurrency market is also undergoing its own evolution, both reflecting the transformative power of technology in finance.

As of December 12, Bitcoin’s price was reported at $92,362.57, up 2.83% in 24 hours. This rise occurred after the Federal Reserve announced a 25 basis point rate cut and a plan to purchase $40 billion in short-term government bonds.

Market analysis shows that although Fed policies initially drove Bitcoin to a high of $94,601, market expectations diverged, leading to a subsequent pullback. Currently, Bitcoin is seeking support around the $90,000 level.

Similar to how traditional financial institutions utilize AI for risk management, the Bitcoin ecosystem is also advancing technological development. Researchers at Blockstream proposed hash-based signatures as a quantum-resistant upgrade for Bitcoin, emphasizing that its security relies only on the hash function assumption.

06 Digital Innovation in Gold Loans

Gold loans, a business deeply rooted in Indian culture and economic structure, are experiencing a modern transformation driven by technology.

Roy specifically pointed out that gold loans are one of the key pillars of the company’s growth in the second half of the year. Among the 200 new branches planned, about 50 will be Sampoorna branches, offering products beyond gold loans.

AI applications in the gold loan sector are multifaceted, with loan amount assessment being one of the most prominent areas. Natural Language Processing (NLP) is also applied in this field, where AI-powered chatbots and virtual assistants provide quick, personalized customer service through NLP, streamlining loan processing.

Data analysis and machine learning help lenders better understand customer needs, enabling the creation of more tailored gold loan products. This personalized approach not only meets customer demands but also enhances customer loyalty.

The company is also adjusting its business, aiming to become a fully retail-managed financial company within the next two to three quarters.

Future Outlook

As of December 12, the total global cryptocurrency market capitalization has rebounded to $3.23 trillion, with Bitcoin trading at $92,362.57 on Gate.io.

Like L&T Finance, many financial institutions are seeking ways to reduce operational costs, minimize risks and losses, with reducing human intervention and errors being key strategies. In an era where traditional and digital finance converge, whether through AI-optimized gold loans or decentralized cryptocurrencies, technological innovation is redefining the boundaries and possibilities of value exchange.