The use of AI in wealth management must be applied intelligently

WARNING: Do not apply technology for technology’s sake. And, AI in wealth management is no exception.

Just because a technology is new and shiny, don’t immediately prioritise it. First, identify a problem in your business operations or strategy, or a new way of adding value, which is supported by technology and in most cases, a partner.

AI in wealth management

Similar to most other industries, the use of AI in wealth management has the potential to revolutionise a sector struggling with digital change.

But, any use of AI or automation must be applied intelligently and not because it is the new fad.

Traditional industries are having to adapt in the digital economy, with changing customer demands and an eruption of disruptors waiting to pinch once-loyal clients. They can adapt with the aid of technology.

The wealth management sector is facing a growing need for technology-led change, driven by a new generation of wealth.

“New wealth is driving change in the wealth management industry. Historically, personal service has often acted as a driver for loyalty amongst High Net Worth Individuals (HNWIs), but the emergence of the millennial generation is shifting priorities,” said Tim Waterton, VP of UK Business at M-Files.

AI could hold the answer, but many wealth managers are struggling when it comes to implementation — it is not their field of expertise.

A guide to artificial intelligence in enterprise: Is it right for your business?

While true artificial intelligence is some way off, businesses are taking advantage of intelligent automation, like machine learning, to improve business operations, drive innovation and improve the customer experience. Read here

A challenge and opportunity

A recent poll amongst 500 private wealth executives revealed that AI represents both a major challenge and opportunity, with over a third (36%) of respondents admitting they have struggled to capitalise on the technology.

Waterton agrees that AI has the potential to transform the way wealth management professionals deliver services to clients and streamline their processes, but also advises caution relating to over-automation.

The next generation of high net worth individuals (HNWIs) “have grown up with instant access to information and see cutting-edge technology tools as a basic requirement for any investment scenario,” explained Waterton.

As a result, wealth managers have to change — they have to provide the resources to meet these new demands, “but the evidence shows that many are not doing this,” he continued.

“Not only is this frustrating for investors but also for staff of those wealth management firms.”

AI and investing: The artificial intelligence analytical revolution

We are set to see convergence in AI and investing, leading to an AI analytical revolution. Read here

Digitally native employees

Millennials will soon be the dominant generation in the global workforce, and they are digitally savvy.

“As digital natives, they are incredibly ambitious, wanting to move into managerial positions much faster, and aren’t afraid to change jobs to achieve this,” said Waterton. “They will want their employer to match their ambitions and will be unimpressed having to navigate cumbersome, inflexible technologies which hold back their [and their organisation’s] productivity.”

The solution

AI can provide a solution to these problems “by helping to automate on-boarding processes, provide smarter access to data and create new customer experiences,” he continued.

However, it’s critical that any technology implementation be undertaken intelligently.

“It shouldn’t be a case of automating for automation’s sake,” confirmed Waterton. And, because of this, AI is best applied in small steps, with small wins. It’s not a case of rolling out the technology across an organisation.

“This starts with automating and streamlining manual processes, such as on-boarding a new client. This could include all forms of engagement from initial communications, anti-money laundering checks, risk profiling, and all the legal documentation in between.

“Additionally, by using intelligent information management solutions, staff have the means to simplify how they access, secure, process and collaborate on documentation. Doing so will aid productivity, enabling staff to find and access information across their systems much faster so they can build stronger relationships with their clients.”

How to implement artificial intelligence into your business

How can your business embrace the artificial intelligence arms race? Jorge Sanchez — director of product strategy at Appian — explains everything your business needs to consider. Read here

Blink and you’ll miss it

“The millennial generation is shaking up the wealth management industry. But for a sector typically slow to change it’s important organisations don’t sit back and let technologies, like AI, pass by. It risks [next generation] HNWIs switching to more progressive rivals,” summed up Waterton.

“Equally, a gung-ho approach of automating every process is also not the answer. It’s important to strike a balance which enables information to be managed, secured and shared in an efficient and intuitive manner. Doing so will not only provide investors with much needed visibility over the health of their wealth but also provide those digital natives entering the wealth management industry with the tools needed to perform their roles to the best of their abilities.”

Avatar photo

Nick Ismail

Nick Ismail is a former editor for Information Age (from 2018 to 2022) before moving on to become Global Head of Brand Journalism at HCLTech. He has a particular interest in smart technologies, AI and...