Financial Services spending on artificial intelligence (AI) in Asia/Pacific is set to reach US$4.29 billion in 2024, according to IDC Asia/Pacific's latest report titled, Asia/Pacific Financial Services: Artificial Intelligence Market Forecast, 2020 - 2024.

The spending on AI by the financial services sector in Asia/Pacific is estimated to grow at a compound annual growth rate (CAGR) of 22.1% in the 2019 - 2024 period.

Currently, the financial services spending in APEJ represents 15% of the worldwide spending on AI.

IDC Financial Insights Asia/Pacific research manager Sneha Kapoor says, “AI has a high need for localisation to ensure that the algorithms used by institutions are sufficient and fit for each Asia/Pacific market."

"The localisation 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," Kapoor says.

In the Asia/Pacific financial services sector, the majority of adoption is taking place in user/data interaction and learning types of AI software technologies.

The user/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.

Kapoor says, “The banking industry is the largest spender on AI in Asia/Pacific, led by People's Republic of China (PRC).

"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 Asia/Pacific senior research manager Ashutosh Bisht says, “With the COVID-19 pandemic pushing digital transformation (DX) at the forefront for enterprises, the role of AI in the DX journey is undisputed.

"As enterprises continue to stride toward the next normal, they will start to invest in AI to achieve unprecedented value through greater intelligence.

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

The analysts point to systems that hypothesise 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, IDC states.