AI

APAC financial services spending on AI to reach $4.29 billion by 2024

The spending on artificial intelligence (AI) by the financial services sector in the Asia Pacific (APAC) is estimated to grow at a compound annual growth rate (CAGR) of 22.1% in the 2019–2024 period to reach $4.29 billion in 2024, according to the International Data Corp. (IDC) Asia Pacific’s latest report titled “Asia/Pacific Financial Services: Artificial Intelligence Market Forecast, 2020–2024”

Currently, the financial services spending in APEJ (APAC except for Japan) represents 15% of the worldwide spending on AI.

“AI has a high need for localization to ensure that the algorithms used by institutions are sufficient and fit for each Asia Pacific market,” said Sneha Kapoor, research manager at IDC Financial Insights Asia/Pacific. “The localization 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 behavioral scoring despite thin files in developing markets; and fraud analytics to understand unique transaction patterns.”

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IDC said that in the APAC financial services sector, most of the adoption in user or data interaction and learning types of AI software technologies. The user or 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% and is estimated to overtake on-premises deployments in 2024.

Banking industry

“The banking industry is the largest spender on AI in Asia/Pacific, led by the People’s Republic of China (PRC),” Kapoor said. “With a 45% share of the total Asia Pacific 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.”

IDC defines AI simply and elegantly as a system that learns, reasons, and self-corrects. It 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.

“With the COVID-19 pandemic pushing digital transformation (DX) at the forefront for enterprises, the role of AI in the DX journey is undisputed,” said Ashutosh Bisht, senior research manager at IDC Asia/Pacific. “As enterprises continue to stride toward the next normal, they will start to invest in AI to achieve unprecedented value through greater intelligence.”