Spending to reach US$4.29 billion by 2024.
The spending on AI by the financial services sector in Asia Pacific is estimated to grow at a compound annual growth rate (CAGR) of 22.1 per cent in the 2019–2024 period to reach US$4.29 billion in 2024. Currently, the financial services spending in APeJ represents 15 per cent of the worldwide spending on AI.
In IDC’s newly released report, Asia Pacific Financial Services: Artificial Intelligence Market Forecast, 2020–2024 shows the APeJ financial services sector, is going through a high number of adoptions in user/data interaction and learning types of AI software technologies.
The user/data interaction software technologies include natural language processing, question and answer (Q&A) processing, facial recognition, natural language generation, video and image analytics, and speech recognition.
The learning technologies include supervised and unsupervised machine learning, and reinforcement learning, and neural networks. In terms of deployment, the public cloud model for AI software continues to accelerate at a CAGR of 40.5 per cent and is estimated to overtake on-premises deployments in 2024.
AI has a high need for localisation to ensure that the algorithms used by institutions are sufficient and fit for each APeJ market, said Sneha Kapoor, research manager at IDC Financial Insights Asia/Pacific.
“The localisation of AI is crucial for a long list of AI use cases: AI-powered chatbots and recommendation engines to capture local nuances and slangs; credit decisioning to comprehend behavioural scoring despite thin files in developing markets; and fraud analytics to understand unique transaction patterns,” said Kappor.
IDC notes that AI has a high need for localisation to ensure that the algorithms used by institutions are sufficient and fit for each APAC market.
The banking industry is the largest spender on AI in Asia/Pacific, led by People’s Republic of China (PRC). With a 45 per cent share of the total APAC AI spending, PRC was the largest market in 2019 and is projected to continue its dominance through 2024 – followed by traction and advancements in other countries such as Australia, India, Korea, Singapore, and Hong Kong.
With COVID-19 pandemic pushing digital transformation (DX) at the forefront for enterprises, the role of AI in the DX journey is undisputed. As enterprises continue to stride toward the next normal, they will start to invest in AI to achieve unprecedented value through greater intelligence, notes IDC.
IDC defines AI simply and elegantly as a system that learns, reasons, and self-corrects. The research firm points to systems that hypothesize and formulate possible answers based on available evidence and can be trained through the ingestion of vast amounts of content.
AI systems can automatically adapt and learn from their mistakes and failures. As enterprises pivot toward a future of intelligence, the demand for AI continues to grow.
Retail investors and consumers are not the only beneficiaries of the global fintech boom. More small and medium-sized enterprises (SMEs), which have traditionally been neglected by existing banks, now have access to peer-to-peer lending services from alternative financing providers. Shuvro Mainuddin, Frost Sullivan APAC’s consultant for banking and financial services, said: “No longer just a channel, ‘digitisation’ is the new paradigm for leading banks and financial institutions in Southeast Asia to cater to the increasingly important SME client base. Such widespread adoption of fintech will continue to reshape the financial services industry, making it more customer-focused than ever.”