JAKARTA, 6 March 2024 – IBM (NYSE: IBM) today unveiled a new study on artificial intelligence (AI) adoption in Indonesia’s financial services and insurance (FSI) and manufacturing sectors, which found that most local corporate respondents (62%) are investing in piloting AI in their companies. The “Generative AI: Shaping Indonesia’s Business Ecosystem Tomorrow” study by Advisia Group, on behalf of IBM and the Collaborative Research and Industrial Innovation in Artificial Intelligence (KORIKA), also indicated that 23% of enterprises are already in the AI investment stage, adopting AI capabilities that interoperate with the company’s business functions.

Indonesia today leads the Southeast Asia region with $366 billion in projected AI contributions to the national GDP¹, with increased economic output expected to be driven by the integration and utilization of AI technologies in various sectors across the country. Key challenges, however, remain in digital proficiency gap (48%), lack of internal data governance (40%) and lack of visibility on business outcome (12%). According to the study, this has prevented surveyed companies to advance to the next stage. 

“There is a great potential for AI to advance Indonesia's digital economy. I believe AI technology will be crucial in driving substantial growth,” said Prof. Hammam Riza, the President of KORIKA. “Instead of replacing human jobs, individuals who embrace AI tools are positioned to excel beyond those who do not, and that is the importance of integrating AI for enhanced performance and success.” 

"Generative AI will have a multiplier impact on businesses, from decision-making to customer experience to revenue growth. But anchoring human talent is essential to embrace AI," said Roy Kosasih, President Director, IBM Indonesia. " We believe an interdisciplinary approach, a model that demonstrates a mutual relationship between societies, users, and AI development, will emphasize the value proposition it offers, via a human-AI partnership.” 

According to this study commissioned by IBM, polled companies in the financial services and manufacturing industries will gain potential incremental value from AI adoption. Respondents believe the technology is maturing though the level of readiness still varies. 

Aimed to empower technology decision makers in Indonesia to make informed choices in the adoption and integration of AI solutions, the study also reveals additional insights:

Stages of AI adoption of Indonesian organizations

According to the research, companies have taken unique approaches to adopting AI technology. 23% of companies in the FSI and manufacturing sectors at the enterprise level focus on leveraging AI capabilities that work seamlessly across the majority of divisions. 

Meanwhile, 62% of the companies surveyed said they frequently streamline the foundation of use cases, such as improving data security when using AI capabilities in chatbots, virtual assistants, dashboards, and language translation. 

During the pre-AI investment stage, 15% of companies conducted extensive assessments of functions or divisions that can benefit from AI, including information security assessments, sales and marketing, virtual assistance, financial planning, and audit functions.

Capturing the economic value of AI 

The report found that some of the most critical obstacles lie in effectively managing “big data” to make informed decisions, mitigate risks, and address real-time inquiries. Financial services appear to embrace AI in more organizational functions, such as customer experience (100%), fraud detection (23%) and loan processing (10%), using chatbots, dashboards and electronic know-your-customer applications. 

Respondents in the manufacturing industry focus more on dashboards for their shared services, as well as unlocking potential to optimize manufacturing through inventory management (100%), demand prediction (33%), and data processing (33%). 

Skills and data governance as key hurdles in adopting AI

In terms of challenges, almost half of the Indonesian businesses surveyed (47%) note the need to improve digital skills, especially when it comes to managing teams, utilizing specialized expertise, and fostering meaningful communication.

Lack of internal data governance (40%) can often lead to missed targets and objectives due to data being scattered across various systems like multiple ERPs, warehouse management systems, etc.

Governance will define the success in AI adoption in Indonesia

Underscoring governance as key to the responsible and successful adoption of AI, the report finds that the Ministry of Communication and Informatics’ (Kominfo) Circular Letter No. 9 of 2023 on AI Ethical Guidelines, marked a significant milestone for Indonesia, outlining the ethical principles for AI business conduct, including three policies on ethical values, ethical execution, and responsible usage in the development of AI. 

"At IBM, we believe that AI's purpose is to augment human intelligence and that the benefits of the AI era should touch the many, not just a few. Data and insights should belong to their creator, and the technology must be transparent and explainable, along with a clear understanding of who trains the AI system, what data was used, and most importantly, what went into their algorithms' recommendations," said Kosasih.

"IBM believes in AI governance, a set of guardrails that ensure AI tools and systems are safe and ethical. Frameworks, rules, and standards that direct AI research, development, and application will ensure safety, fairness, and respect for human rights. And we are proud to be part of Indonesia’s journey into this new technology era of governance, helping businesses go to the next level,” concluded Kosasih.

Download the full report here.

Methodology

The research conducted by Advisia spanned from January 5 to February 24, 2024, and employed a mixed approach, incorporating desk research, qualitative, and quantitative research. 

The qualitative research was conducted by a purposive sampling through in-depth interviews to 19 stakeholders from academia, government officials, AI community leaders, and business professionals at managerial and top-level who are leading operations, IT, data, marketing, and project management in financial services and manufacturing sectors. 

The quantitative survey was conducted online through CASI (computer aided self-interview) to 40 business professionals at managerial and top-level who are leading operations, IT, data, marketing, and project management with 50% in the banking, 25% in manufacturing and 25% in financial non-banking sectors. 

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Reference:

¹ Furnished by Advisia Group from Racing toward the future: artificial intelligence in Southeast Asia, Kearney, October 07, 2020.

About KORIKA: 

KORIKA, an Indonesian artificial intelligence (AI) organization, is built on a foundation of open innovation and Quad-Helix collaboration involving government institutions, industry, academia, and communities. Established as a direct outcome of the National Strategy for Artificial Intelligence (Stranas KA) 2020-2045, KORIKA embodies a strong commitment to value creation through strategic partnerships and collaborative efforts across various sectors. For further insights, visit www.korika.id to explore how KORIKA drives innovation and value creation through its unique organizational structure and collaborative approach. The person in charge of this study is our Secretary General of Membership, Rio Kiantara rio@korika.id cc. rio@advisia.group.

About Advisia Group: 

Advisia stands as a beacon of expertise, offering a suite of services that fuse research-driven insights with cutting-edge digital and AI transformations. At the heart of our approach lies our profound capability in insight-driven strategies and behavioral intelligence, empowering us to deliver unparalleled market research, strategic market entry, and investment consulting services. Our team of seasoned advisors harnesses the power of data analytics and human understanding to guide businesses towards informed decisions and sustainable growth in today's ever-evolving market landscape.

About IBM:

IBM is a leading provider of global hybrid cloud and AI, and consulting expertise. We help clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs, and gain the competitive edge in their industries. More than 4,000 government and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM's hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently, and securely. IBM's breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and consulting deliver open and flexible options to our clients. All of this is backed by IBM's long-standing commitment to trust, transparency, responsibility, inclusivity, and service.