51 percent of Indonesian financial institutions are focusing on deploying generative artificial intelligence (GenAI) for everyday tasks, a study revealed Thursday.

The report titled “Harnessing the Power of (Gen)AI in Indonesian Financial Services” which was conducted by AC Ventures, Boston Consulting Group (BCG), BCG X and the Indonesian Chamber of Commerce and Industry (Kadin Indonesia) said that their respondents in Indonesia prioritize ‘deploying’ and ‘inventing’ over ‘reshaping’ in-house processes, with 51 percent focusing on deploying GenAI for everyday tasks.

Meanwhile, 27 percent seeing great opportunity in inventing new products and services powered by GenAI.

Globally, a separate BCG study found that 85 percent of financial institutions see GenAI as a highly disruptive technology, but only 18 percent have a clear strategy for in-house implementation.

It is noted that the responses they received from financial institution business leaders and fintech startups in Indonesia echoed this sentiment locally.

This gap underscores a critical opportunity for Indonesia’s financial services sector to position itself at the forefront of the GenAI frontier.

In Indonesia, 61 percent of financial institutions are confident in their technological infrastructure necessary for integrating GenAI, particularly in the context of robust data and technology stacks.

Nearly half of the sector’s local leaders claim to already be leveraging GenAI to elevate customer service, with a third claiming to now be reaping visible benefits.

Further, 44 percent of local leaders acknowledge the potential of GenAI in revolutionizing risk assessment in microlending via more innovative data sources and analytical models.

Beyond customer service and microlending, four other areas where GenAI is seen as beneficial in the industry include productivity, rapid lending, fraud management, and hyper-personalization.

As GenAI use cases become more widespread, major Indonesian banks and financial institutions are advancing related initiatives from pilot stages to scalable projects, according to the report.

These efforts not only aim to widen financial access and inclusion but also ensure compliance with Indonesia’s rigorous Personal Data Protection Law.

Despite the enthusiasm for GenAI’s capabilities, the report noted many Indonesian financial institutions are still in the early stages of implementation.

The report pointed out that while 41 percent of respondents are piloting GenAI use and running proof of concepts, scaling these to deliver substantial business value remains a challenge.

Only 37 percent feel they have the necessary talent, and yet, upskilling employees to use and interact with AI tools is one of the three lowest foundational priorities cited.

Meanwhile, only 29 percent are confident in their operating models for GenAI readiness.

For GenAI implementation to succeed, business readiness needs to be on par with tech readiness, said the report.

“The potential of (Gen)AI in Indonesia’s financial sector is clear – it can broaden financial access, improve the customer experience, and facilitate the rapid scaling of services, among other possibilities,” said Andy Lees, Managing Director and Partner at BCG X.

According to him, their findings show that the technology has been rapidly adopted by both large financial institutions and fintech firms.

However, he noted many initiatives are tech-led pilots that are yet to translate into real business value at scale.

“Financial institutions would benefit from a strategic framework for integration that encompasses everything from technical implementation and governance to operations and talent,

“Moreover, such a framework allows for outcomes to be clearly measured, ensuring that AI initiatives continuously align with business goals. This will be critical to the delivery of lasting transformation and real business impact,” he added.

It is noted that the report includes various calls to action for business leaders, emphasizing the necessity of a strategic, holistic approach to GenAI integration.

By focusing on the foundational elements of governance, technology, people, and operational processes, Indonesian financial institutions can not only navigate but also lead the GenAI race, transforming challenges into opportunities for growth and innovation, said the report.

“With the incoming administration looking to build sovereign AI, there’s a push to enhance regulatory frameworks and accelerate investment in local infrastructure for GenAI development,

“This is prompting vital discussions on upgrading Indonesia’s energy infrastructure with renewables and sustainable financing,” said Pandu Sjahrir, Founding Partner at AC Ventures and Department Head of Economic and Financial Technology at Kadin Indonesia.

According to him, AI and GenAI have the potential to elevate Indonesia’s economy by transforming not just the private sector, but also state-owned enterprises and government agencies.

“Effective deployment requires sustainable data centers powered by renewable energy, strict privacy laws, and strong public-private partnerships,

“This report provides strategic guidance for both the private and public sectors, while also emphasizing the importance of cybersecurity to protect national data assets,” he added.

The report, which explores the adoption and impact of GenAI in Indonesia’s financial sector, draws from a survey of 41 financial institution business leaders and interviews with five fintech startups.

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