In a joint venture, AC Ventures, Boston Consulting Group (BCG), and the Indonesian Chamber of Commerce and Industry (Kadin) have unveiled an insightful report entitled “Harnessing the Power of (Gen) AI in Indonesian Financial Services.” This report delves into the integration and effects of Generative AI (GenAI) across Indonesiaโs financial landscape, providing a comprehensive analysis for industry leaders on how to weave GenAI into their operational and product frameworks effectively.
Insights from leaders and strategic recommendations
Drawing on a survey of 41 leaders from various financial institutions and interviews with five fintech startups, the study highlights that 51% of these organisations integrate GenAI for routine tasks, while 27% explore its capabilities for developing new products and services. Additionally, 49% of leaders point to GenAIโs role in boosting customer service, with 34% recognising visible benefits from its deployment.
Furthermore, 44% of the respondents see considerable potential for GenAI to transform risk assessment in microlending through the use of more innovative data sources and improved analytical models. The report underscores that 61% of financial institutions in Indonesia are well-equipped with the necessary technological infrastructure to support GenAI integration.
Framework for deployment and international perspective
The report introduces a strategic “Deploy, Reshape, Invent” framework aimed at guiding financial institutions on how to harness GenAI’s advantages best. This is in stark contrast to global trends, where a separate BCG study indicates that while 85% of global financial institutions recognise GenAI’s disruptive potential, only 18% have devised a concrete strategy for its deployment. This disparity underscores a pivotal opportunity for Indonesiaโs financial sector to take the lead in the GenAI space.
Implementation challenges and forward-looking strategies
Despite the promising adoption rates, many institutions face challenges in scaling pilot projects to broader applications. Approximately 41% of institutions are currently experimenting with GenAI in pilot phases. Yet, only 37% believe they have the necessary skilled personnel, and just 29% are confident in their operational models for GenAI readiness.
Andy Lees, Managing Director and Partner at BCG X, commented, “The potential of (Gen)AI in Indonesiaโs financial sector is clearโit can broaden financial access, improve the customer experience, and facilitate the rapid scaling of services, among other possibilities. Our findings show that the technology has been rapidly adopted by both large financial institutions and fintech firms. However, many initiatives are tech-led pilots that are yet to translate into real business value at scale.โ
The role of public-private partnerships and the path forward
Pandu Sjahrir, Founding Partner at AC Ventures and Department Head of Economic and Financial Technology at Kadin Indonesia, highlighted the potential changes for the upcoming administration, emphasising the enhancement of regulatory frameworks and investment in local infrastructure for GenAI development. He noted, โWith 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. 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.โ
This report provides a snapshot of the current GenAI integration landscape within Indonesia’s financial services and offers a robust strategic guide for both the private and public sectors, positioning Indonesia as a leader in technological innovation in the financial realm.
