©2019 by InterGen Data, Inc.

AI in Wealth Management: Emergent and Exponential Promises

December 28, 2017

A few years ago, considering a role for artificial intelligence (AI) in financial markets was unthinkable.  Now, not only is it steadily making its way up Wall Street, AI is also projected to take the financial industry by storm.

 

AI is uniquely positioned to deliver distinct benefits to financial firms.  It helps organizations carry out a multitude of core functions in the front, middle, and back office more quickly, efficiently and effectively.

 

In the from office for example, it enhances financial companies' marketing strategies by delivering timely context-aware information to the right client.  It also pulls in vital information from clients to help firms forecast the likelihood of client or advisor churn.  These insights provide a safety net to adjust business outlook and portfolios well in advance and maintain an organization's credibility, prior to the departure of substantial funds.

 

AI is also making its mark in the middle office.  Firms use it to quickly cull out multiple sources of data from many places on millions of accounts in order to streamline account due diligence/compliance "Know Your Customer" processes.  This bolsters employee productivity, reduces monotonous work, and increases accuracy , thus enabling workers to concentrate on mare strategic issues.

 

From a back office perspective, AI provides a unique perspective into customer behavior.  It uncovers instances of promising customer engagement opportunities by aggregating service and support requests, which then can determine unknown patterns.

 

Nowadays, all consumers expect highly individualized products and services.  In the next 18-24 months, I believe FinTech startups will leverage AI's capabilities to model out clients, products, and services on customers' individual financial situations with an extraordinary degree of precision.

 

Currently, there are about 80 internationally recognized Robo-Advisors that are entrusted to create financial plans today.  However, they are essentially elegant on-boarding systems that are equipped to handle basic investments for simple accounts.  None of them have advanced capability to differentiate two people with similar financial backgrounds at diametrically opposite life stages requiring different investment vehicles.

 

AI however, has the capability to more quickly and accurately correlate various products, services, and life stages appropriately.

 

With AI, firms can also promote their products and services to the right client at the right time with the 'right type' of risk tolerance.  But most of all, what AI delivers in wealth management is the fastest turn around in ROI.  Computers can pull up a firm's biggest client, scour through millions of accounts, and identify thousands of financial 'look-a-lines' who haven't yet taken advantage of additional investment products.  It can provide firms with unforeseen marketing opportunities, promote loyalty programs, discounts, and expand customer based in unforeseen ways.

 

In my view, it is imperative that companies in the industry prioritize AI's adoption.  To do this well, they will need to get over their legacy fears, invest in a data science team, throw all their data into a 'data lake,' and let technology do its work.  This who start now are bout to gain an edge, outpacing those who leave it for tomorrow.

 

 

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