Emerging from the ashes of unprecedented geopolitical turmoil, the pandemic, inflation, and volatile markets, the wealth management sector finds itself at a transformative juncture.
Here, a trend takes center stage: artificial intelligence (AI), an innovation altering the industry’s landscape, which has seen a dramatic investment surge.
A Digital Revolution and the Wealth Management Sector
In the last few years, we’ve seen the accelerated rise of digital transformation, driven by younger, tech-savvy clients inheriting wealth and expecting a digitized customer experience.
With global uncertainties increasing, preserving wealth becomes paramount, intensifying the need for AI integration to provide real-time engagement and customer-centric experiences.
However, many wealth management firms lag, not yet achieving the right mix of technological capabilities to compete in this new environment.
Traditional companies have little choice but to embrace this metamorphosis or risk being left behind. The 2023 World Wealth Report by Capgemini stated unequivocally that digital transformation is a game-changer for the wealth management industry, with AI serving as a make or break factor.
Despite the urgency, the sector’s pace of change has been less than bold. While some pioneering firms have started their digital transformation, many still grapple with outdated business processes, leaving room for AI to streamline operations and boost productivity.
The Client’s Demand and AI’s Role
The rich aren’t happy. A decline in global wealth in 2022, the first in over a decade, has left them dissatisfied with their wealth managers. The survey reveals that only half of the wealthy are satisfied with their wealth management’s touchpoints. AI could bridge this satisfaction gap.
Financial advisors currently expend two-thirds of their time on non-core activities, leaving less time for meaningful client interactions.
Wealth management firms are now gradually empowering their advisors with digital tools, granting them access to expert advice and automating routine tasks. However, this is only the beginning.
To meet the client’s demand for a seamless digital experience, relationship managers need to mobilize resources and experts effectively.
AI could play a crucial role here, helping wealth management firms create a one-stop-shop digital workstation—an integrated interface that amalgamates various features and delivers superior service.
For example, Indosuez Wealth Management in Paris reduced the time spent onboarding clients by a staggering 90% by connecting different departments on a single platform.
In addition, environmental, social, and governance (ESG) goals have gained traction among clients. Wealth management firms are addressing this need by creating centralized ESG data hubs, making use of AI to gather and analyze data and provide actionable insights.
With more than half of the wealthy individuals demanding reliable ESG scores for their assets, and 40% of financial advisors requiring more data for understanding ESG impact, AI is positioned to become an industry norm.
The transformation into a digital leader in the wealth management industry is not an overnight process. But the rewards for those who successfully integrate AI are considerable, from increased client satisfaction and higher retention rates to sustainable growth.
In a nutshell, the wealth management industry cannot afford to ignore AI. It holds the key to shifting business models from transactional relationships to financial life partnerships, a move that will undoubtedly propel the industry forward in this era of digital transformation.
As the tides of change rush in, the question is not whether wealth management firms can afford to invest in AI, but rather, can they afford not to?
