Bill Gates recently called artificial intelligence, or AI, “the biggest technological breakthrough in our lifetime.” The founder of Google Brain, Andrew Ng, termed it “the new electricity.” Just as consumers have embraced the digital experience in the retail sphere, they have also grown increasingly comfortable letting data sets and algorithms perform financial tasks.
In contrast to their digitally savvy clients, though, many financial firms are struggling to keep pace with the growing demand for all things digital.
According to Roubini ThoughtLab’s latest study, “Wealth and Asset Management 2022, The Path to Digital Leadership,” the cost of moving slowly can be high. “Our analysis shows that late adopters may lose more than revenue,” the study noted. “They may lose their relevance to the next generation of investors and their position in tomorrow’s marketplace.”
Envisioning The Digital Future
In conjunction with Broadridge Financial Services, J.P. Morgan Asset Management, Oracle, Cisco, Sapient Consulting and others, Roubini ThoughtLab surveyed some 1,500 global investment providers and conducted more than 40 interviews with senior executives in finance and technology. Their goal for this year’s study was to provide “a vision of the digital future for the investment industry, offer actionable insights and make the business case for getting there.”
“Digital leaders report an 8.6 percent increase in revenue, an 11.3 percent rise in productivity, and a 6.3 percent improvement in market share. Advanced firms now generate 32 percent of their revenue through digital channels, and expect that amount to rise to 48 percent by 2022,” the study pointed out.
Digital leaders acknowledge what will be the growing importance of AI in the digital transformation of industry from the front office to the back office over the next five years. According to the study, while more than half of the digital leaders are already using AI to increase productivity, some 40 percent are extending AI applications to investment management as well.
Extending The Advisor’s Expertise The Digital Way
While AI will gradually replace staff in some functions like personal assistance and machine learning, flesh and blood advisors are still favored by many who prefer the human touch.
Over the near term, a bionic solution that combines the strengths of AI with the empathy, intuition and experience of an advisor may be the best solution for most clients. AI’s less-sophisticated cousin, the robo-advisor, has already begun migrating to bionic advice capabilities that combine both digital and human advice.