Covering Disruptive Technology Powering Business in The Digital Age

Earlier today, leading Southeast Asian venture capital firm AC Ventures, in partnership with Boston Consulting Group (BCG) and its tech build and design unit BCG X, as well as the Indonesian Chamber of Commerce and Industry (Kadin Indonesia), launched a marquee sector report titled “Harnessing the Power of (Gen)AI in Indonesian Financial Services.” The report’s launch took place at AC Ventures’ headquarters in downtown Jakarta, with a variety of local and international press in attendance.

The study—which draws from a survey of 41 financial institution business leaders and interviews with five fintech startups—unveils critical insights into the adoption and impact of AI and GenAI across Indonesia’s financial services sector. It includes strategic recommendations for business leaders in the private sector for implementing the technology into their products and operations. The report also features key advice from Kadin Indonesia for the Indonesian government as it transitions to a new administration and pursues the prospect of sovereign AI development for national interests.

Central to the report’s findings is a strategic, multilateral “Deploy, Reshape, Invent” framework, guiding Indonesian financial institutions on how to effectively integrate GenAI to maximize its benefits. Among these three pillars, our respondents prioritize ‘deploying’ and ‘inventing’ over ‘reshaping’ in-house processes, with 51% focusing on deploying GenAI for everyday tasks, and 27% seeing great opportunity in inventing new products and services powered by GenAI.

Globally, a separate BCG study found that 85% of financial institutions see GenAI as a highly disruptive technology, but only 18% have a clear strategy for in-house implementation. The responses we 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% 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% 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. 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, many Indonesian financial institutions are still in the early stages of implementation. The report points out that while 41% of respondents are piloting GenAI use and running proof of concepts, scaling these to deliver substantial business value remains a challenge. Only 37% 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% are confident in their operating models for GenAI readiness. For GenAI implementation to succeed, business readiness needs to be on par with tech readiness.

Andy Lees, Managing Director and Partner at BCG X, said, “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. 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.”

Lees added, “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.”

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.

Speaking in the context of how Indonesia’s incoming administration can learn from the private sector’s experience with AI and GenAI implementation, Pandu Sjahrir, Founding Partner at AC Ventures and Department Head of Economic and Financial Technology at Kadin Indonesia, explained, “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. 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.”

Pandu added that this report will also serve as input for the White Paper on Economic Development and Policy Directions for 2024-2029, currently being prepared by Kadin Indonesia.

Gunawan Woen, Co-Founder & CEO of ESB, Indonesia’s largest fully integrated restaurant management SaaS platform and AC Ventures portfolio company that has implemented AI, said, “AI has become a game changer in ESB’s SaaS ecosystem, particularly in how it supports small and medium-sized enterprises (SMEs) in the F&B sector by acting as their financial expert, business consultant, marketing analyst, forensic auditor, and more—professions that were previously too expensive for these business owners to afford. From ESB’s perspective, instead of replacing jobs, AI offers many crucial services that were previously inaccessible to most business owners in Indonesia.

GenAI, in particular, has been instrumental in helping ESB accelerate AI implementation specifically within the F&B industry. We have successfully adapted Large Language Models into Specific Language Models.”

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