Indonesia’s financial institutions are at a critical crossroads, with Boston Consulting Group (BCG) warning that banks and insurers must transition from treating artificial intelligence as a technical experiment to a core business strategy. During the Asian Banking & Finance and Insurance Asia Summit, BCG Partner Miftah Mizan emphasized that while Indonesia has successfully broadened digital access, the industry is now shifting into an “intelligence war.” In this new phase, market leadership will be determined by how effectively institutions integrate AI into their products and customer engagement strategies over the next two years.
While Indonesia has seen impressive digital adoption and financial inclusion reaching 80%, the sector is beginning to face the same profitability pressures seen in more mature global markets. BCG’s research indicates that while revenue pools are growing, profits are being squeezed by narrowing margins, stagnant fees, and the rising costs of technology and compliance. Mizan argued that traditional cost-cutting measures are no longer sufficient; instead, a fundamental shift in how banks operate is required to maintain resilience in Southeast Asia’s evolving landscape.
A significant gap remains between AI ambition and actual value. BCG found that only 5% of companies globally have successfully scaled AI to generate meaningful financial returns. Many Indonesian firms remain stuck in a cycle of fragmented experimentation, where AI projects lack clear commercial accountability and fail to impact the bottom line. Legacy infrastructure and complex governance continue to serve as major hurdles for institutions trying to balance the maintenance of old systems with the development of future-ready capabilities.
To succeed, BCG suggests that financial institutions must restructure their operating models to be “AI-first” rather than simply layering new tools onto outdated processes. This includes early collaboration with regulators to establish compliance frameworks. Looking ahead, the rise of autonomous AI agents is expected to be a massive value driver; while virtually unmentioned in 2024, these systems are projected to contribute nearly 30% of all AI-driven value in the financial services sector by 2028.
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