A recent study by Experian, in collaboration with Forrester Consulting, sheds light on a growing trend among leaders in the financial services and telecommunications sectors across Australia and New Zealand. These industries are significantly ramping up their investments in artificial intelligence (AI) and automation, aiming to improve decision-making processes, particularly in lending. The findings provide a snapshot of the region’s strides toward leveraging advanced technologies to maintain competitiveness in an evolving digital landscape.
The research surveyed 150 senior executives within the financial and telecommunications sectors in the two countries. Nearly half of the respondents (47%) reported enhanced investments in automation. This push comes as lenders seek to expedite loan approval processes, which have become a critical factor for differentiation in a competitive, digitally driven market.
Customer Insights and Leadership Education Gaps
The report highlights a parallel rise in investment in customer insights, with 49% of leaders in Australia increasing budgets in this area. However, the report identifies a critical challenge as the gap in educational awareness at the leadership level. A striking 72% of respondents admitted the need to educate senior executives about the transformative potential of generative AI, underlining a crucial area for organizational development.
Jordan Harris, Head of Innovation at Experian, emphasized the importance of aligning leadership with technological advancements. “Leaders in the financial services and telecom sectors recognize the importance of investing in customer insights and automation to stay competitive. Bringing senior leadership on board to understand the value of these technologies is vital,” Harris remarked.
Slow Adoption of Automated Decision-Making
Despite growing consumer expectations for faster digital interactions, the global adoption of automated credit risk decision-making tools remains limited. Only 24% of lenders worldwide have fully implemented these systems, with 33% believing they have achieved substantial adoption. However, Australia and New Zealand are leading the way globally, with only 17% reporting limited or no adoption of automated credit risk systems.
Even so, the region has room for improvement in efficiency. Less than 20% of financial institutions in Australia and New Zealand can approve standard consumer loans within an hour, a figure below the global average of 22%. However, 56% of respondents in the region reported loan approvals within one day, a performance that surpasses the global average of 39%.
AI’s Role in Shaping the Future
A strong commitment to AI was evident throughout the study. Approximately 64% of respondents believe that the future success of their industries hinges on effective AI utilization. Over half (53%) acknowledged that AI and machine learning have significantly enhanced the speed and quality of their decision-making processes. Nonetheless, 58% struggled to pinpoint the most impactful use cases for generative AI, signaling the need for strategic planning in this domain.
The implementation of analytics models remains another bottleneck. Only 29% of businesses in the region can deploy analytics models within six months, primarily due to a shortage of in-house expertise among 42% of data and analytics leaders.
Growing investments in data and cloud technologies
To overcome these challenges, organizations are increasingly focusing on enhancing data analytics capabilities. Nearly half (49%) of financial services and telecom leaders in Australia have increased budgets for customer insights. Additionally, over half (56%) anticipate expanding their technology budgets as economic conditions stabilize, while 51% are channelling investments into cloud solutions. These efforts aim to make data more accessible and actionable for AI-driven credit risk assessments.
Addressing Financial Vulnerabilities
The research also highlights growing concerns about financial stress among consumers. Economic pressures such as inflation and rising interest rates have prompted 62% of respondents to recognize their impact on clients’ loan repayment abilities. According to the Experian Risk Radar Report, 77% of credit risk leaders believe economic conditions in Australia have reached a critical juncture, and 69% predict heightened credit stress and missed repayments in the coming year.
In response, 39% of risk leaders are prioritizing strategies to detect and address financial vulnerabilities among customers. Harris observed that organizations are investing in tools to provide early identification of hardship and expanding hardship programs to support consumers in managing repayments effectively.
The Path Forward
Harris underscored the importance of collaboration, education, and a customer-centric approach in leveraging advanced technologies. “By fostering collaboration, education, and a customer-centric approach, organizations can unlock the full potential of these technologies and drive meaningful change in the industry,” he concluded.
The report underscores that while technological tools are increasingly available, their effective integration and application remain a challenge. As organizations in Australia and New Zealand strive to balance technological adoption with customer care, their efforts offer valuable insights into the evolving dynamics of the financial and telecommunications sectors in the digital age.
