Today, Southeast Asia's leading venture capital firm, AC Ventures, in collaboration with Boston Consulting Group (BCG), and BCG X's design and technology unit, and the Indonesian Chamber of Commerce and Industry (Kadin Indonesia), released a comprehensive report titled "Harnessing the Power of (Gen)AI in Indonesian Financial Services." The launch of the report took place at AC Ventures' headquarters in downtown Jakarta, with various local and international media in attendance.

The study - based on a survey of 41 financial institution business leaders and interviews with five fintech startups - reveals important insights into the adoption and impact of AI and GenAI in Indonesia's financial services sector. The report includes strategic recommendations for business leaders in the private sector to implement these technologies in their products and operations. It also presents key advice from Kadin Indonesia for the Indonesian government as it transitions to a new administration and pursues national AI development for the benefit of the country.

Central to the report's findings is the multilateral strategic framework "Deploy, Reshape, Invent," which guides Indonesian financial institutions on how to effectively integrate GenAI to maximise its benefits. Among these three pillars, our respondents prioritised 'deploying' and 'inventing' over 'reshaping' internal processes, with 51% focusing on applying GenAI to daily tasks, and 27% seeing great opportunities in creating new products and services powered by GenAI.

Globally, a separate BCG study found that 85% of financial institutions consider GenAI a highly disruptive technology, yet only 18% have a clear strategy for internal deployment. The responses we received from business leaders of financial institutions and fintech startups in Indonesia reflect this sentiment locally. This gap highlights an important opportunity for Indonesia's financial services sector to position itself at the forefront of GenAI innovation.

In Indonesia, 61% of financial institutions feel confident in their technology infrastructure required to integrate GenAI, especially in the context of robust data and technology systems. Nearly half of local sector leaders claim to already be utilising GenAI to improve customer service, with a third of them reporting visible benefits. In addition, 44% of local leaders recognise GenAI's potential to revolutionise risk assessment in microlending through more innovative data sources and analytical models. Besides customer service and microlending, four other areas where GenAI is perceived to be beneficial in the industry include productivity, fast lending, fraud management, and highly precise personalisation.

As the use of GenAI expands, Indonesia's major banks and financial institutions are developing related initiatives from the pilot stage into scalable projects. These efforts not only aim to expand financial access and inclusion but also ensure compliance with Indonesia's strict Personal Data Protection Law.

While enthusiasm for GenAI capabilities is high, many Indonesian financial institutions are still in the early stages of implementation. The report shows that while 41% of respondents are running GenAI pilot projects and concept trials, expanding such usage to deliver substantial business value remains a challenge. Only 37% feel they have the necessary talent, and upskilling employees to use and interact with AI tools is one of the three lowest basic priorities mentioned. Meanwhile, only 29% feel confident in their operational model for GenAI readiness. For GenAI deployments to be successful, business readiness needs to align with technology readiness.

Andy Lees, Managing Director and Partner at BCG X said, "The potential for (Gen)AI in Indonesia's financial sector is clear - it can expand access to finance, improve customer experience, and facilitate rapid expansion of services, among other possibilities. Our findings show that these technologies have been rapidly adopted by both large financial institutions and fintech companies. However, many initiatives are still technology-led pilot projects and have yet to generate real business value at scale."

Lees added, "Financial institutions would benefit from a strategic framework for integration that covers everything from technical implementation and governance to operations and talent development. In addition, such a framework allows outcomes to be clearly measured, ensuring that AI initiatives continue to be aligned with business objectives. This will be critical to achieving sustainable transformation and real business impact."

The report includes various calls to action for business leaders, emphasising the importance of a strategic and holistic approach to GenAI integration. By focusing on foundational elements such as governance, technology, human resources, and operational processes, Indonesian financial institutions can not only overcome challenges, but also lead the GenAI race, turning challenges into opportunities for growth and innovation.

Speaking in the context of how the incoming administration can learn from the private sector's experience in AI and GenAI implementation, Pandu Sjahrir, Founder of AC Ventures and Head Department of Kadin Indonesia's Economic and Financial Technology explained, "With the incoming administration planning to build Digital Sovereignty (Sovereign AI), there is a push to improve the regulatory framework and accelerate investment in local infrastructure for GenAI development. This triggers important discussions on improving Indonesia's energy infrastructure with renewable energy and sustainable financing. AI and GenAI have the potential to boost Indonesia's economy by transforming not only the private sector, but also state-owned enterprises and government agencies. Effective implementation requires sustainable data centres powered by renewable energy, strict privacy laws, and strong public-private partnerships. This report provides strategic guidance for the private and public sectors, while emphasising the importance of cybersecurity to protect national data assets." Pandu added that the report is also an input for the White Paper on Economic Development Direction and Policy for 2024-2029, which is being drafted by Kadin Indonesia.

Gunawan Woen, Co-Founder & CEO of ESB, Indonesia's largest SaaS restaurant management platform which is also an AC Ventures portfolio company that has implemented AI, said, "AI has become a big differentiator in ESB's SaaS ecosystem, especially in the way it supports small and medium-sized enterprises (SMEs) in the F&B sector by serving as financial experts, business consultants, marketing analysts, forensic auditors, and others-professions that were previously too expensive for these business owners to have. From an ESB perspective, instead of replacing jobs, AI offers many essential services that were previously out of reach for most business owners in Indonesia. GenAI, in particular, has played an important role in helping ESB accelerate the implementation of AI specifically in the F&B industry. We have successfully adapted Large Language Models into Specific Language Models."