Wealth management gains from AI developments

By Herbert Leonelli | 11 April 2019

Artificial intelligence is set to transform businesses in ways we’ve not seen since the industrial revolution. The digital era is evolving in the wealth management sector, leading to a dynamic increase of AI and robo-advisory tools. 25% of 600 banking professionals, surveyed by MoneyLIVE and presented at FStech, said they used AI at a moderate extent. The growth of AI will “plug the current gap in data science skills, predicting that by 2020 more than 40% of data science tasks will be automated” according to Gartner.

According to a recent Deloitte report: “A huge wave of technology disruption is heading toward the asset servicing industry. Within a five-year timeframe, robotic process automation (RPA), blockchain, and cognitive systems will have a dramatic change and a profound, lasting impact on service providers’ operations". In the report, Deloitte suggest that the rise of disruptive technologies can offer great opportunities to incumbents to achieve improved productivity, minimise operational costs, reduce risk and comply with regulatory scrutiny, while enhancing client service and expanding to a wider range of market segments, competitively.

The World Economic Forum estimates that 133m new roles may emerge by 2022. AI and machine learning are developing to better safeguard businesses and automate processes, leaving valuable resources to address business objectives. Robo-advisory service is gaining traction with individual investors and firms embracing it, according to The National.

“AI-powered value-added services are already on the way to becoming mainstream practice in an industry seeking to build new value chains. Incumbents need to step into this space if they are to compete effectively. Delivering best-in-class personalised financial and investment advice at scale would be economically impossible using human advisors but can be achieved by AI,” the report states.

According to Aite, while “wealth management is characteristically a human and emotional endeavour,” with constant changes in regulation, target markets, global uncertainty and “disruptive innovation,” AI is expected to develop over the next couple of years. AI will become easier to use and understand, particularly as more vendors get involved and bring their own innovations to the field.

Report findings show that “automation could achieve cost savings of approximately 30–40%. Opportunities have emerged for new technologies to replace back- and middle-office repetitive, manual and cost-inefficient processes, with process automation–delivered on a continuous basis.”

Taking these findings further, imagine the savings a firm could have by utilising robo-advisory tools to segment and target particular markets that are currently either not served or underserved. To these markets a personalised and tailored service using AI technology could be offered, increasing loyalty and customer satisfaction through a fast and unique user/customer experience.

In other areas, robo-advisory could be used to automate the onboarding process with online checks and to support the investment officer in drawing tailored investment proposals with alerts on performance and monitoring. Such processes could potentially save more than 50% of company’s resources that should be allocated to offer a higher-level of service with more value. It is becoming clear that added value is created by focusing on digital infrastructure as it provides a holistic viewpoint of the client’s wealth condition, the famous 360 degree view of the client, while offering a unique and a more personalised advice improving operational and cost efficiencies through a cleaner data architecture along with accurate and consistent regulatory compliance. 

The key driver to unravelling the benefits of AI technology for the wealth management sector comes from the changing client behaviour. Investors are becoming more tech-savvy and eager to use automated tools and expect personalisation of service. Digitilisation is progressing to new levels of experience and firms especially with competition from fintechs, need to adjust their practices and methodologies to embrace the new behavioural patterns. Technology is the way to achieve this. 

Profile Software, capitalising on years of experience in the investment management industry, delivers a range of innovative applications with advanced capabilities. They are globally implemented, available either on premises or in the cloud providing unparalleled flexibility, scalability and superior service to both the organisations and their clientele. The solutions’ modularity enables firms to utilise the desired functionality and achieve efficiencies and operational excellence on a single and secure platform. Axia and Axia Robo Advisor successfully meet the challenges of the future.

About Profile Software
Founded in 1990, Profile Software is a specialised software solutions provider with offices in key financial centers and a presence in 38 countries across Europe, the Middle East, Asia, Africa and America delivering market-proven solutions to the Investment Management and Banking industries. Following the successful acquisition of Login SA, the Paris-based treasury software provider, the range of solutions offering has been enriched, whilst these can also be implemented as stand-alone. Profile Software is recognised as an established and trusted partner by international industry specific advisory firms. Profile Software’s solutions enable organisations to align their business and IT strategies, while providing the necessary business agility to proactively respond to the ever-changing market conditions.

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