Wealth Management and Artificial Intelligence | Dee.ie | Ireland EU

Wealth Management and Artificial Intelligence | Dee.ie | Ireland EU
Wealth Management and Artificial Intelligence

Wealth Management and Artificial Intelligence

All things evolve. Wealth management is no exception. And it is currently at a turning point: changes seem all but inevitable.

In fact, according to recent PwC predictions, AI (Artificial Intelligence) will drive an increase in global GDP of 14%. Just one of those irrelevant statistical numbers? Let’s sauce it up a bit: 14% of global GDP amounts to about $15.7 trillion!

No wonder the asset management field is expecting a revolution. From individual asset owners to institutions, AI is gradually becoming a powerful tool for managing data and dealing with risks.

And we are gradually becoming your favourite site on all things AI-related.

Let’s see what’s around the corner this time.

Applications of AI in Wealth Management

AI is a powerful tool. If we’re right, soon enough, it will be omnipresent: in power systems, in pharmaceutics, in the legal world.

In the case of wealth management, we’re already a step ahead. There are plenty of services and platforms which are used all around:

  • Aladdin helps managers analyse investment risks;
  • Neo provides tools for calculating liquidity ratios, detects frauds and deals with margin calls; and
  • SmartWealth, which delivers to its wealthiest clients fully personalized investment strategies.

One of the most significant investment companies in the world, Goldman Sachs Inc., uses AI to automate the way a bank deals with initial public offerings (IPO). Its AI tools are already in charge of tracking reviews, filling forms, and generating reports.

But, IPO is merely one of the thousands of possible applications of AI in the wealth management field. Xavier Menguy, a partner in Goldman Sachs, recently revealed just how much Goldman Sachs is interested in ML and AI:

ML models are being used across wide areas – from business intelligence and flow analysis to inventory management and derivative pricing, among other things. With that in mind, we’re investing heavily in ML and this is directly reflected in the backgrounds of the people we’re hiring.

AI at the Institutional Level

At this point, it’s important not to forget that asset owners vary and that, consequently, investment strategies differ. Even at its broadest level, there are two types of asset owners: individuals and institutions (sovereign wealth funds (SWF), pension funds, insurance funds, etc.).

Saudi Arabia recently became the first country in history which has granted citizenship to a robot. So, it’s not surprising that it is at the forefront of developing wealth management AI tools.

Case in point, recently it was announced that it has invested in a robotics initiative through its SWFs. Together with SoftBank Group, a Japanese technology company, they aim to incorporate AI in both the private and the public sector.

Speaking of Japan – its government pension investment fund (GPIF) partnered with Sony CSL to be able to apply AI tools in asset management.

Hiro Mizuno, the chief investment officer and executive managing director at GIPF, commented on the occasion:

“Given recent developments in AI technologies, GPIF is increasingly convinced that AI would be able to assist our fund investment operation, from asset allocation to asset manager selection and evaluation processes. By partnering with Sony CSL and leveraging their cutting-edge AI research, GPIF aims to stay ahead of the curve to remain capable of fulfilling our fiduciary duty to future generations.”

All in all, although individual investors – even if they are global investment companies (like Goldman Sachs) – are more likely to try emerging tech tools, it seems that even institutional asset owners have already embarked on this road too.

Since recently, their investment strategies appear to have shifted towards implementing modern technology, first by financing the development of reliable AI tools, and then applying them at all levels.

Conclusion

At the end of 2017, Sarbjit Nahal, head of the investment strategy at BAML, said:

“Asset owners across the world, be it petro-funds or SWFs, are becoming increasingly systematic in terms of the way they take these trends on board.

Investment firms and institutional funds of all types and volumes are using, considering and/or investing in AI tools. This is more than promising. Expect faster development of AI technologies asset owners and managers will trust.

And get on board as soon as possible!

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