AI is without doubt one of the most exciting topics of our time.
The technology has really captured the public imagination and is receiving a huge amount of media coverage. Hardly a day goes by without another big news story breaking, with these heralding amazing breakthroughs and warning of apocalyptic dangers in turn.
Technical progress – and adoption in both the public and private sectors – is happening at dizzying speed, leading some to fear that AI is running ahead of our understanding and control.
Concerns that the “rise of the machines” will cause mass job losses are a recurring theme which the financial services sector is anxiously mulling as much as any other.
AI seems certain to cause a far-reaching reconfiguration of how financial services are delivered, wealth management included.
Yet, as this report will argue, redundancies are emphatically not the prize in this niche sector.
Rather, this and other emerging technologies will be the means of solving many of the industry’s most pressing challenges to ensure that it continues to thrive. Wealth levels may be rising robustly, but wealth managers face a perfect storm of heightened competition, increased operating costs and compressed profitability.
Pre-tax profit margins are thought to have plummeted by close to a third in the past decade – a squeeze which has made maintaining a low-tech status quo untenable.
It has been remarkable to see how technology has emerged from the shadows over that time; it is now central to industry dialogue and the foundation of many firms’ growth strategies. AI adoption is the next – and arguably most transformative – leap the wealth management sector will make as it continues to reinvent itself.
None of this is to say that AI is a “magic bullet” for all the challenges firms face, but it will likely prove a very large part of the solution if approached correctly. Therefore, as the title of this study sets out, institutions need to start looking beyond the all the “hype” around AI to consider all the use cases which might apply to their business model and client base as a matter of urgency.
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