Wealth management is exploring how technology can be deployed to better serve clients, more so than ever before, but with Robo being on-trend one year and now AI, what is the industry doing to deploy buzz tech and what is being done?
Speed of travel is slow
“With the hype surrounding disruptive technology it is easy to lose sight of reality”, said Ian Rumens, head of private wealth, Intertrust, Jersey. “While the private wealth industry is positive towards new technology such as AI, blockchain and robotics only a minority of firms are currently putting it to use and the speed of travel remains slow.”
No human emotion
The legal industry is excited by AI but many believe it is not mature enough to trust in a wealth management context; that it can’t handle multifaceted advice or deal with the breadth of human questioning. However, according to Tommaso Migliore, it’s wrong to think of AI as having all the answers. Co-founder of MDOTM, a start-up which develops investment strategies for financial markets using AI, Migliore views AI as “systems to be used on very specific tasks and problems. It definitely cannot be used as a black box hoping that by simply providing data to the machine, it will come up with a winning strategy”. What it can provide is “speed and very specific investment strategies that are able to respond to changes in market conditions quickly and without emotional biases, which are deeply ingrained in the psychology of investors and hard to overcome”, he explains.
‘Bread and butter’ basics targeted
A further comment on the evolution of AI within the industry is the focus on solving ‘bread and butter’ issues rather than focusing on client experience. Vistra’s 2020 industry research report surveyed 800 industry figures and found ‘know your customer’ and anti-money laundering requirements, were at the top of the list for automation. Intertrust’s study of the industry shows similar findings: 54 per cent believe disruptive technology will deliver the most value by driving back-end operational efficiencies.
Pattern detection adds scalability
An example of this is from Saxo Bank who recently announced it is deploying machine learning and AI to its regulatory framework to aid financial crime detection procedures. The benefit of this technology is that “the algorithm is constantly improving and finding new patterns that would be difficult or time-consuming to do manually” according to Steen Blaafalk, Chief Financial & Risk Officer at Saxo Bank. However, he acknowledged: “Digitisation alone cannot solve every regulatory requirement and some processes still need a human hand. Better use of RegTech will remain necessary to scale across multiple markets and jurisdictions”.
Chat robot debut
Where else is AI useful? According to Nic Andrew, Head of Nedgroup Investments, which is owned by Nedbank and who recently launched the online investment platform, Extraordinary Life™, “Using data analytics, behavioural science and AI with clients, is a world that is still in its infancy.” However, Andrew believes chat bots are already here. “I won’t be surprised if chat becomes the standard way of engaging and transacting with service providers over the next five to ten years,” he says.
Got to be in it to win it
It’s easy to disregard buzz tech like AI as hype. “However, the pace of AI adoption is likely to accelerate dramatically in the coming years. Once this happens, we will be able to spot the winners that have found new ways to apply disruptive technology and as a result stolen a march on the competition”, explains Rumens.