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Examining the Data on Digital Twin in the Banking, Financial Services, and Insurance Industry

The data in our 2022 Digital Twin Global Survey Report demonstrates how digital twin technology is bringing together simulation, high-performance computing (HPC), artificial intelligence (AI), and data science in novel, transformational ways for industries around the world. In our latest industry-specific research report, we turn our attention to digital twin technology in the banking, financial services, and insurance (BFSI) sector. In this article, we’ll examine the data we gathered last year from an independent, international online survey of 2,007 professionals to see when, why, and how the banking, financial services, and insurance industries are adopting digital twin technology, what digital twin’s future is in the industry, and more. 

But before we dive in, it’s important to note the definition of digital twin technology: The process of using data streams to create a digital representation of a real-world asset to improve collaboration, information access, and decision-making. For those outside the banking and financial services industry, it can sometimes be difficult to imagine how BFSI organizations would use digital twin technology because of common notions of what constitutes a “real-world” asset. For instance, it’s much easier to conceptualize a digital twin of an automotive chassis than a financial instrument such as a customer persona. But as this article and the 2023 Global Digital Twin BFSI Report shows, digital twin technology has a myriad of uses for financial applications, and is in fact already widespread within the industry. 

That said, let’s examine the data on digital twin in the BFSI industry in greater detail.

 

Digital Twin Adoption and Usage in the BFSI Industry

In our survey, we examined questions relating to the adoption of digital twin technology within the BFSI industry and how BFSI companies are using the technology. To begin, we wanted to see what percentage of BFSI organizations have already adopted digital twin, what technologies they’re using alongside it, how the industry compares to its counterpart industries, and more. 

The data shows that the BFSI industry already uses digital twin technology relatively widely. 71% of BFSI respondents said their organization already leverages digital twin technology. Among other industries represented in the survey, this proportion was two points higher than the overall average (69%). 

While the BFSI industry’s digital twin adoption numbers were only slightly higher than the overall survey average, BFSI respondents were very comfortable working with digital twin technology – and they already considered digital twin a crucial part of their current operations. Overall, BFSI respondents were the most likely industry group to say they are “highly knowledgeable about digital twin technology” at 64% – 14 points higher than the overall survey average (50%). BFSI respondents were also the second least likely group to say they “find understanding digital twins to be confusing” at 8%. 


On that same note, of BFSI respondents who said their organization currently leverages digital twin technology, 97% said the technology was “important” to their organization – in line with the overall survey average. But more crucially, 71% of those respondents said digital twin was “very important” to their organization – a proportion tied for the highest in the survey, and eight points higher than the overall survey average (63%). 

The data revealed that the adoption of digital twin technology in the BFSI sector mostly fell in line with overall survey averages. Of BFSI respondents who said their organization already uses digital twin technology, 18% said their organization began investing in digital twins within the past six months or sooner; 9% said investment began three or more years ago.

As for digital twin usage, BFSI respondents were most likely to use digital twin technology in operations (60%), a proportion 18 points higher than the overall survey average. In addition, BFSI respondents – by far – were the most likely to say they use digital twin technology in behavioral modeling (i.e. psychological, personality/behavior assessments and predictions) at 50%, 20 points higher than the overall survey average. In addition, BFSI respondents were most likely to use digital twin technology to “better understand and optimize a business process” (54%), “digitally monitor (near) real-time state and behavior of real-world, physical objects” (51%), and “predict the future state and behavior of physical assets using predictive analytics” (51%). It’s important to note that these uses are skewed toward monitoring and predicting, which are imperative in the BFSI industry. These capabilities allow BFSI organizations to do things like prevent fraud, monitor and predict customer/borrower behavior, track customer satisfaction, and more. The proportions of these uses were slightly higher than the overall survey average in all three instances.

We find the most interesting statistics within this section to not only be that the BFSI industry is already using digital twin technology widely, but that the industry already felt that digital twin technology was very important to their organization. This is significant, as it shows these organizations believe digital twin is already having a major impact on their operations and efficiency. It also shows that BFSI organizations believe digital twin technology helps them perform the tasks most important to next-generation financial operations – mainly monitoring, prediction, behavior analysis, and persona creation.

 

Digital Twin's Impact in the BFSI Industry

This section will examine what impact digital twin technology is having on BFSI organizations’ processes and products today. To begin, in the graph below we can see what BFSI respondents said digital twin had the greatest impact on. It’s important to highlight that BFSI respondents were the most likely of any industry to say “personalization of products and services” at 32%. On the same note, this data also makes clear the industry’s emphasis on “real-time monitoring and control” at 38%. As mentioned earlier, both these aspects are important facets of the BFSI industry, especially when tied with predictive analytics regarding customer behavior.


Moreover, 93% of BFSI respondents whose organization currently uses digital twin said the technology helps them create more sustainable products and processes – the third-highest proportion among the other industries within the overall survey. And 83% of BFSI respondents say their organization is either currently using, or plans to use, digital twin to reach their sustainability objectives; 56% of those respondents said their organization is currently using the technology. Both these statistics are in line with overall survey averages. On the operational side of sustainability, 76% of BFSI respondents said digital twin technology has helped their organization’s products and/or processes become more sustainable by making their products more energy efficient and/or less wasteful – a proportion only trailing the industrial equipment sector (85%). 

 

Expectations of Digital Twin Technology's Future in the BFSI Industry

Lastly, we’ll recap the data on the future of digital twin technology in the BFSI industry and where respondents believe the technology will go in the near future. 

To start, of BFSI respondents who said their organization doesn’t currently leverage digital twin technology, just 4% expect their organization to adopt digital twin technology in the next six months or sooner. 58% said they expect their organization to adopt the technology in the next year or more, the second-highest proportion of any industry and 14 points above the overall survey average. This data indicates that organizations that don’t currently utilize digital twin aren’t in a hurry to adopt, or may be looking to do so in a more strategic manner. This is an interesting finding, especially since organizations that do use digital twin were the most likely industry group to say it’s “very important” to their operations.


The data also revealed that 88% of non-management BFSI respondents felt their leadership would be more likely to invest in digital twin technology if they better understood its benefits, a number three points higher than the overall survey average. In the graph below, we can see what non-management BFSI respondents wished their leadership better understood about digital twin technology. Most of these percentages track with overall survey averages.


 

Conclusion

The report’s data suggests digital twin technology is widespread in the BFSI industry which, more than other industries, understands the technology and believes it’s a crucial aspect of their current operations. In essence, digital twin technology gives BFSI organizations the tools to better perform tasks and processes that make financial processes safer, more accurate, and more powerful; these activities include simulating risk scenarios, creating virtual customer profiles and virtual replicas of systems, preventing fraud, predicting consumer behavior, and more. 

What the data also proves is that digital twin technology beyond “physical” objects isn’t just a fringe use case – it’s a widespread, industry-common practice that’s already shaping the way financial organizations operate. As such, when we think of digital twin technology, we should always be thinking of how it’s being used in all industries – a testament to its flexibility and adaptability.

To read the full report on digital twin in the BFSI sector, click here. To read the overall global survey report, click here. To learn all about Altair’s digital twin capabilities, visit https://altair.com/one-total-twin. 

 

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