The AI haves are pulling ahead of have-nots, McKinsey study finds

Companies in Southeast Asia with a proactive strategy to adopt artificial intelligence (AI) are seeing a significant impact on their businesses, finds a new McKinsey Global Institute study.

The study compares the profit margins of proactive adopters of AI with those of non-adopters, and finds gaps opening up already between them in most sectors. The biggest differences between adopters and non-adopters can be seen so far in high tech and telecom, financial services, manufacturing, retail, healthcare, education, and professional services.

This study released last month analyzes a Southeast Asian subset from a survey of 3,000 companies across the world earlier this year on their adoption of AI. While the survey clearly shows the advantage gained by those adopting AI, the ecosystem for doing this is still quite immature in Southeast Asia compared to the US and China, with several sectors lagging.

Half of all the current AI use cases in Southeast Asia are in high tech and telecom, and financial services.

Half of all the current AI use cases in Southeast Asia are in high tech, telecom, and financial services.

Hong Leong Bank of Malaysia, for example, uses Watson – a cloud-based AI system from IBM – to gauge customers’ emotions by the way they speak on the telephone. Hong Kong-based startup CompareAsiaGroup, which operates in five Southeast Asian countries, is using machine learning to match customers with financial, telecom, and utility services.

The use of virtual assistants to answer customer queries is catching on too. But very few firms in Southeast Asia have scaled up AI use cases such as credit scoring and dynamic pricing which are being developed in the US and China. Banks and startups in the region will have to develop new skills and innovate to benefit from the opportunity. And before that, they need to accelerate digitization of customer interactions because AI tools have to be fed copious amounts of data.

What makes the case for it stronger is that their consumers are by and large digitally savvy, especially in Singapore, Malaysia, and Thailand, which are well-connected online, as well as Indonesia where smartphone usage is rising fast.

Not surprisingly, telecom operators are among the early adopters of AI in the region along with banks and fintech startups. Apart from analytics on customers to minimize churn or cross-sell services, they’re using AI to move into other industries as well.

Talent crunch

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