In broad terms, Artificial Intelligence (AI) is intelligence exhibited by machines including the interpretation of complex data. Undoubtedly Wealth Management (WM) is a data-rich business. Whether its data about markets or data about clients, combining the two in an intelligent way and communicating them to clients is a key part of the WM business model.
Robo Advisors already are a good example as to how AI can be used in WM to enhance financial services end to end.
However, a majority of clients don’t want to delegate their portfolio management, they want to be guided but maintain control over their assets and have more choice than just a couple of portfolios using 10–15 ETFs in one combination or the other.
This is where real AI comes into play: Even though they will only buy it when they see it, there are a number of reasons as to why clients would probably prefer the advice from a Robo over the Advice from a human being. Amongst others: Convenience (24/7), objectivity, lower inhibition levels as well as lower costs resulting from automation.
From onboarding clients and profiling them (e.g. by using speech recognition software to assess risk preferences), to making investment proposals (using simulation tools), managing portfolios (using network analysis to enhance diversification) and reporting (using virtual reality or chatbots) – AI can be used in numerous ways to enhance an already existing offering – including those of Robo Advisors.
Hence, the capability to integrate AI into existing processes has become a crucial factor in staying competitive, while making better-informed decisions and being able to save costs through automatization should provide further incentives for banks to take a closer look