The report by the consulting firm BCG explores the possibilities and benefits offered by generative AI in asset management.
The Roscongress Foundation presents the salient points of the publication accompanied by fragments of broadcasts of relevant panel discussions from the business programme of international events held by the Roscongress Foundation.
Although financial indicators in asset management are improving, further success and higher profitability can only be achieved through innovation, namely by using generative AI.
Global net wealth staged a significant recovery in 2023, growing by 4.3% after a difficult year in 2022. Much of the growth was due to a rebound in the financial markets, accompanied by a rise in the volume of assets under management (AuM). Financial wealth—a subset of global wealth—rose by almost 7%, following a decline of 4% in 2022. The gains were especially strong in North America and Western Europe, while growth in China remained more subdued.
Yet in spite of the upswing, profitability continues to be a concern. Wealth managers improved their profitability margins modestly, which was a notable achievement compared to the 2-basis-point decline that the wealth management industry endured in 2022. Most of the improvement, however, is attributable to windfall profits from net interest income. That trend is not likely to continue in the current environment, with funding costs rising and interest rates expected to fall—especially as inflation, operational inefficiencies, and tightening regulations continue to bite. BCG experts therefore anticipate that profit margins will not increase dramatically in the near term unless the industry experiences a positive shock. In fact, that positive shock could be on the horizon if wealth managers tap into the full potential of generative AI (GenAI). This technology can unlock efficiencies across the value chain and allow greatly enhanced client interaction and personalization at scale.
Video: https://roscongress.org/sessions/kif-2024-delovaya-programma-natsionalnaya-sistema-prostranstvennykh-dannykh-otkryvaya-novye-investitsionnye-vozmozhnosti-regiono/search/#00:44:50.047
GenAI has the potential to bring client interactions to a higher level while reducing costs, boosting long-term profitability and unlocking productivity across the board.
Opportunities to improve processes and operations exist throughout the value chain, but they are especially promising in four areas: client acquisition, onboarding, servicing, and internal support. Early adopters are now piloting the use of GenAI to support client acquisition. They are testing tools that create personalized pitch documents from various internal and external sources. In addition, in line with data privacy regulations, these tools might collect client background information from external sources and autonomously insert it into the customer relationship management (CRM) program. BCG research and project experience indicate that these GenAI applications could reduce the amount of time that relationship managers spend on preparing documents such as RFPs and client pitches by up to 50%. Given the large manual effort that goes into prospecting professional clients, these applications should be especially powerful for banks that are active in higher-end wealth segments and in the external asset management space.
GenAI analysis of client information can also accelerate onboarding and periodic client file reviews to keep the information current. Several wealth managers are leveraging generative pretrained transformer (GPT) technology to introduce chatbots that serve either their clients or their staff. Although banks are currently testing such applications on basic tasks with noncomplex clients, BCG experts believe that banks will soon expand this technology to handle more complicated requests involving wealth management products and services. The same technology can provide internal support for tasks such as preparing to meetings, aggregating data, assembling documentation, and producing risk profiles. Thus, GenAI will enable relationship managers and their teams to focus more on the human aspects of client relationships.
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Companies that use GenAI will gain a unique competitive advantage.
Enhancements that emerge from GenAI will pave the way to higher revenues, efficiencies, and client satisfaction. Early studies indicate that employees who use GenAI for administrative tasks are almost 30 percentage points more satisfied at work than peers who don’t use GenAI at all. As of now, BCG experts estimate potential frontline time savings of up to 30% from GenAI. Because the technology is quickly evolving and the industry is only starting to grasp its true potential, however, that figure is likely to increase.
All wealth management client segments will see dramatic changes, but BCG experts anticipate that the most significant near-term impact will be in the affluent segment. Here, the technology might soon be able to acquire and onboard prospects almost independently of a human relationship manager, while catering to the clientele’s day-to-day banking needs. In the future, an advanced AI assistant might also be able to answer product-specific questions and provide personalized advice on simple products at scale, depending on the regulatory regime. One can even imagine an all-encompassing tool that will have access to the firm’s vast client data and advanced servicing capabilities, and will be able to embrace a knowledge base that takes it far beyond the roles that exist today. As GenAI rapidly evolves, however, wealth managers can draw significantly more competitive advantage from developing a more wide-ranging view of how to incorporate the technology into their overall strategy and existing digital transformation roadmap.
Video: https://roscongress.org/sessions/splf-2024-delovaya-programma-novye-regionalnye-obekty-intellektualnoy-sobstvennosti-na-evraziyskom-prostranstve-edinye-evraziyski/search/#00:49:12.191
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