According to a recent Forrester Consulting study commissioned by FICO, known as the ‘Current State of Advanced Analytics Adoption’ study, Indonesia’s financial sector is in the early stages of data and analytics maturity. The study indicates that while the majority of Indonesian lenders are currently in the development or exploration stages of their advanced analytics strategy, they face challenges in executing these strategies with confidence.
Currently, 84% of respondents are committed to developing an advanced analytics strategy in the coming year, while 79% are still in the exploration phase, assessing its viability for their businesses. Promisingly, interest in advanced analytic platforms is growing, signaling a shift away from legacy siloed solutions. Over half of Indonesian financial services institutions (FSIs) are poised to take action, with 67% gearing up to build more data applications, 59% looking to leverage predictive analytics and machine learning, and 54% aiming to centralize customer data on specialized enterprise platforms in the next one to two years. Moreover, nearly half (49%) of Indonesian FSIs are also planning to create an Insights Center of Excellence for business intelligence, advanced analytics, data science, and/or artificial intelligence over the next twelve months.
However, despite this growing interest, more than half of Indonesian FSIs implementing or expanding data operations practices (56%) and data integration initiatives (61%) are doing so without a comprehensive strategy. This lack of a structured approach is reflected in the fact that only around half of the respondents express confidence or a high level of confidence in carrying out these initiatives (46% for data operations and 53% for data integration practices).
More information: https://www.fico.com/en/fico-platform-indonesia
“There is a fast follower opportunity for lenders to emulate local and global best practice and achieve the results of the first-movers in the market,” said Dattu Kompella, managing director in Asia for FICO. “The custom study conducted by Forrester Consulting tells us that firms that have implemented advanced analytics are more likely to have generated top-line growth while improving their bottom line due to insight-driven decision-making. In fact, advanced insights-driven firms are five times more likely to say they grew by 20% or more.”
Balancing Priorities: The Customer Experience Conundrum
Improving customer experience remains the top priority for Indonesian FSIs, with 74% of business decision-makers emphasizing its significance. However, the study highlights the potential for further improvement in better leveraging their advanced analytics-driven initiatives to drive customer experience outcomes (46%), with it ranking fifth on the list of operationalizing priorities. Currently, it trails objectives such as increasing revenue growth, improving customer acquisition, and enhancing productivity gains, showing there is an opportunity for Indonesian FSIs to enhance their focus on even more impactful customer experiences.
A Bain & Company survey conducted in 2022, involving over 10,000 Indonesian consumers using its NPS Prism® benchmarking platform, identified just two banks in Indonesia that significantly excelled in customer experience. These banks achieved Net Promoter Scores (a measure of customers’ likelihood to recommend a store or brand) that were 15 to 20 points higher than the following 15 competitors.
“Bain & Company found that banks outperformed competitors’ Net Promoter Scores by delighting customers during crucial moments like account openings, resolving a suspected fraud and payments,” explains Kompella. “Other Indonesian financial institutions should prioritize advanced analytics and highly personalized experiences for greater customer engagement and retention.”
Challenges Faced by Indonesian FSIs
The study also highlights the technology obstacles faced by Indonesian FSIs, including the integration of solutions (77%) and constraints due to legacy technology (77%). Finding suitable AI/ML/advanced analytics models (75%) is another hurdle. Furthermore, more than one in three (37%) Indonesian participants report budgetary constraints as a key challenge in operationalizing their advanced analytics strategy. Indonesia has the lowest average annual budget for data analytics and procurement in the APAC region, with a mean allocation of 320k USD, over 140k USD less than the APAC mean of 464k USD.
Additionally, the research highlights other obstacles faced by Indonesian FSIs, such as a lack of cross-functional collaboration (46%), skills and experience shortages (46%), competing business priorities (44%), a lack of appropriate data and analytics processes (39%), and a perceived lack of readiness to implement data governance practices (37%).
Addressing Confidence and Technology Obstacles
“With the right technological support and a strategic vision, Indonesian FSIs can overcome these challenges and transform into market leaders,” added Kompella. “A platform approach can help slay complexity and give banks the confidence to better integrate and operationalize data to arrive at faster, more accurate decisions.”
“By embracing the fast-follower approach, organizations can leapfrog ahead in operationalizing advanced analytics by adopting proven industry-focused financial technologies and operational know-how from trusted partners.”
FICO will officially launch its industry-leading cloud-based platform on August 29, 2023 at the Pullman hotel in Jakarta. Industry professionals attending the event will have the opportunity to witness the potential of FICO® Platform firsthand and explore ways to enhance customer connections and drive impactful business outcomes.
