Three out of four business leaders agree that their competitive advantage is dependent on making the best use of artificial intelligence (AI) and tools like Generative AI (GenAI) and machine learning, according to Experian’s latest report conducted by Forrester Consulting.
The report delves into the insights of senior decision-makers across four key domains: strategic priorities, data and analytics, technology, and risk management. The research surveyed 1,320 C-suite executives and directors from the financial services and telecommunications sectors across ten countries in the EMEA and APAC regions, including India, Australia, Denmark, Germany, Italy, New Zealand, Norway, South Africa, Spain, and the Netherlands.
The report reveals how business leaders are utilising GenAI, consolidating datasets to improve decisioning models, and focusing on customer experience to better prepare for a future shaped by challenging economic conditions, technological disruption, and evolving customer expectations.
Rise of GenAI in decision-making
Technological disruption, especially the emergence of AI, has been pinpointed as the foremost external factor shaping businesses in the coming two years. A significant 75 per cent of respondents concurred that leveraging AI effectively will be crucial for gaining a competitive edge, with numerous leaders actively investigating use cases for Generative AI.
One prominent application is using GenAI to assess risk, with 78 per cent of participants focusing on analysing alternative data sources to improve decisioning models and create a more comprehensive view of customers.
Observing the importance of AI in gaining competitive advantage, Manish Jain, country managing director at Experian India, said, “This year’s research highlights the importance of two critical factors – first the race for AI superiority, with business leaders believing it to be critical to gain competitive advantage in their sector. And secondly, the clear focus on investment in analytics tools and infrastructure to better harness the power of data, with many businesses still struggling with the time and effort required to develop and deploy models. The findings suggest businesses are increasingly adopting cloud-based services to better connect data, analytics and software.”
Cloud-based platforms key to enhancing risk strategies
Improving customer experience through technological advances is another critical focus. Respondents noted that centralised, cloud-based platforms for data, analytics, and software are crucial to enhancing risk strategies.
A growing credit stress is anticipated, with 41 per cent of respondents expecting an increase in missed repayments and delinquencies. To address this, 50 per cent of risk leaders are prioritising the identification of financially vulnerable customers, using AI to improve credit risk profiling and lending fairness.
Challenges in data consolidation with AI/ML
Data leaders are moving away from siloed datasets, integrating them into cloud-based platforms that enable quicker AI/ML model development.
Currently, 76 per cent of leaders report that deploying AI/ML models takes too long, and 63 per cent are updating models more frequently due to evolving consumer credit behaviours.
A lack of alternative data sources remains a significant challenge, but cloud platforms are helping unlock insights from complex, unstructured data, ultimately improving predictive accuracy and lending decisions.
Malin Holmberg, CEO of EMEA & APAC at Experian, emphasised the role of AI and ML in improving credit assessments, safeguarding vulnerable customers, and addressing macroeconomic challenges.
“It is encouraging to see that the majority of senior leaders are optimistic about growth in the year ahead, with plans for greater investment in technology as a result. But we are still facing broader macroeconomic challenges, with customer financial hardship highlighted as a significant concern. AI and ML tools present a considerable opportunity to enhance the precision of credit assessment, for new and existing customers, and thus can help safeguard vulnerable customers with proactive engagement,” Holmberg said.
First Published: Oct 03 2024 | 3:24 PM IST
