AsPac banks see need to invest in AI – IDC

MANILA, Philippines — Two in every five retail banks in Asia and the Pacific are making an investment in new artificial intelligence (AI) solutions to improve their core operations and data management, according to International Data Corp. (IDC).

In an analysis, IDC reported that 41 percent of banks in the region are investing in specific generative AI platforms to keep up with the times.

The IDC said generative AI is expected to change the way people do banking, as the technology will enhance the core systems and data handling of financial institutions.

IDC research director Ashish Kakar said generative AI produces new algorithms that banks can take advantage of to help in decision-making process. Also, it may be used to automate customer experience tasks to lessen costs and raise efficiency.

“Generative AI is the next game changer for retail banks. It not only enables unstructured data to be included in the decision-making process but it also brings in multiple new algorithms with the help of synthetic data,” Kakar said.

“It has a game-changing ability in the generation of artifacts, such as images, text and voice, that enable an instant gratification experience,” he said.

Banks also intend to employ generative AI in areas such as fraud detection, loan acquisition and knowledge management where its impact has the greatest potential.

IDC research manager Xiao Liu said banks wanting to adopt AI models may acquire pre-trained applications first that they can use for pilot and testing.

Liu said it is understandable for banks to hesitate about investing in generative AI, especially as doing so requires additional costs. Nevertheless, she noted that generative AI may be customized to suit specific requirements, making it adaptable to future needs.

In the Philippines, a recent study by Cisco showed that just 17 percent of organizations are ready to employ AI technologies in their operations. Likewise, 61 percent believe they have a year to implement an AI strategy, or else they will begin incurring losses as a result of falling behind.

A separate study by the IDC reported that the Philippines is trailing its Asia-Pacific counterparts in terms of progress on AI adoption.

Generative AI like ChatGPT can create images, texts and videos in an instant based on available data on the internet, prompting opposition from across sectors for its potential risks to copyright and jobs.