A new report from Temenos, the leader in global banking software and Forbes Insights warns that wealth managers face an existential crisis if they fail to leverage the opportunities offered by artificial intelligence (AI).
‘AI and the Modern Wealth Manager’ reveals that whilst only a third (34 per cent) of wealth managers are currently deploying AI within their firms and a further 25 per cent are testing it, 99 per cent plan to deploy AI within the next three years. The predictive aspect of AI is expected to be a driver of transformative personalisation in wealth management, with the biggest impact on risk management, with better analysis and forecasting—the same elements that will deliver true predictive investment guidance. As a result, each client will get a whole new level of attention.
- Almost a third of wealth managers believe that AI is a game changer for the industry and important to the future of their practice.
- High Net Worth Individuals (‘HNWIs’ or ‘Investors’) appear aligned and optimistic about the use of AI with 84 per cent being accepting or highly accepting of it in their investing experience, with 96 per cent of investors being supportive of digitalization.
- Acceptance in digitization is dramatically up to 52 per cent (from 25 per cent) for wealth managers and 41 per cent (from 14 per cent) for High Net Worth Investors – since 2016
- 46 per cent of wealth managers believe that advanced analytics will help them acquire and retain mass affluent clients
However, there were some discrepancies between the views of wealth managers around the world and investors.
- 67 per cent of High Net Worth Investors believe that their wealth manager should adopt some level of AI immediately
- 45 per cent of wealth managers are concerned that the use of technology could be seen as a lack of personal attention by their clients, whilst this is only a concern for 21 per cent of investors
- 58 per cent of investors by comparison worry about the cyber risk of a hack, followed by concerns around privacy (46 per cent), when compared to 42 per cent and 41 per cent respectively of managers
Wealth managers around the world believe that AI technologies will mostly or completely replace humans over the next five years in the following areas:
|Humans vs machines||Proportion of global wealth managers|
|Forecasting||67 per cent|
|Portfolio management||56 per cent|
|Office operations||56 per cent|
|Risk management||51 per cent|
|Investment advice||49 per cent|
|Client communications||48 per cent|