by  Andrew Tan

How AI Can Transform Asian Finance Firms’ Opportunities

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Embracing the power of Artificial Intelligence (AI) offers significant new business opportunities for financial institutions in APAC to propel them ahead of their competitors, despite AI adoption still being in its early stages across Southeast Asia.

Consulting firm Kearny estimates that AI has the potential to add over $1 trillion to ASEAN’s GDP by 2030. Other research estimates that spending on AI services in the region is predicted to triple from under $200 million in 2022 to over $600 million in 2026. These numbers indicate the size of expectation that AI technologies like Generative AI can drive economic growth and provide a competitive advantage for BFSI companies in Asia.

In the fast-paced and data-rich world of financial services, Gen AI makes it possible to automate many processes. These include aspects of regulation and compliance, balance sheet analysis, risk management, pre-investment decision-making, and smarter customer engagement. These span back-office clearing and settlement through to middle and front-office activities. Evidence suggests many BFSI companies are already exploring these exciting possibilities in 2024.

Executive uncertainty

However, there are also challenges that may lie ahead in the AI adoption journey. Our global study ‘Real State Of AI/ML Capabilities In Software/Digital Native Companies’ found that 97% of executives say that AI and Machine Learning (ML) have failed to meet their expectations, and companies are struggling to understand exactly where and how emerging technologies – such as Gen AI – can be incorporated into their business to bring about the most meaningful value.

One key finding is that companies are too focused on experimentation, testing, and proof-of-concept when it comes to leveraging AI/ML technologies, without linking this closely enough to market demand and customer needs. This has resulted in nearly two-thirds (63%) of companies saying that the AI/ML capabilities within their organization were not fully realized.

What exacerbates these issues in banking and insurance is widespread legacy infrastructure. This often leads to significant additional costs in day-to-day operations, data management, reporting, and the ability to deliver new functionality quickly.

But there are many tangible benefits from AI that BFSI companies in ASEAN can realise with a more structured approach. These include:

Tangible Benefits

The benefits from automation and improved decision-making: Embracing AI brings significant business advantages to BFSI companies in ASEAN. The automation of manual processes streamlines operations, reduces costs, and boosts productivity. With Gen AI, finance firms can enhance decision-making, optimize risk management strategies, and drive better business outcomes. This translates into improved profitability and a stronger position in the ASEAN market.

Automation and improved decision-making

Improved customer experience: In ASEAN’s highly competitive financial services landscape, delivering exceptional customer experiences is crucial. AI-powered solutions enable personalized and tailored interactions, enhancing customer satisfaction and loyalty. From chatbots and virtual assistants that provide real-time assistance to personalized recommendations based on customer data, AI empowers BFSI companies and their customer service representatives to deliver seamless and delightful experiences. These can lay the foundations for a competitive edge in the ASEAN market.

Improved customer experience

Transforming data into actionable intelligence: Data is an asset for BFSI companies in ASEAN that can be used to better advantage. AI can act as a catalyst to transform large volumes of often neglected raw data into actionable intelligence. With advanced analytics, machine learning algorithms, and predictive modelling, AI enables companies to gain valuable insights, identify trends, and make data-driven decisions. This empowers finance firms to stay ahead of the curve, identify new opportunities, and mitigate risks effectively in the dynamic ASEAN market.

Transforming data into actionable intelligence

Strengthening security and preventing fraud: Security and fraud prevention are key concerns for BFSI companies in ASEAN. AI plays a vital role in protecting sensitive financial information. AI-powered algorithms can detect patterns, anomalies, and suspicious activities in real time, enabling rapid responses. By leveraging AI, BFSI companies in ASEAN can safeguard their customers' assets, maintain trust, build confidence, and ensure regulatory compliance in an increasingly digital world.

With the right support, BFSI companies in ASEAN can unlock the full potential of AI today. This will require strong leadership and the right specialized implementation partner support to drive the required change and to make sure employees receive the needed training in AI. Regulation will also play a part, as clear guidelines and frameworks will increase confidence in AI investments.

BFSI companies that most successfully harness AI-driven opportunities will then have the best chance to leapfrog their competitors and emerge as industry leaders. Talk to us to find out how to make this a reality for your organization.