The Genesis of AI Technology in Wealth Management

Now that artificial intelligence (AI) technologies are weaving their way into the traditional world of wealth management, a balancing act has emerged that will define the future of the industry: the blending of man and machine to produce better service and results for increasingly tech-savvy high-net-worth individuals (HNWI) and emerging affluent clients. It’s no secret that Wealth Tech is becoming a bigger part of the wealth management experience. At the center of the transformation is AI, which comprises a variety of technologies–such as machine learning and natural language processing/generation–that are changing the business while its lifeblood remains firmly planted in the expertise and nuanced touch of a human advisor. In the last couple of years, data generated on banks’ digital wealth platforms has grown enormously and at a rapid pace. The volume of data is only going to increase, which poses distinctive challenges for banks as they attempt to create meaningful narratives for all the insights generated by data analytics platforms. This makes the case for automated narrative generation algorithm, which will help wealth management companies efficiently convert findings from data into comprehensive text narratives. The insights gained from these narratives will help build intelligent solutions. Natural Language Generation (NLG), the technology underlying this process, offers a great opportunity to decipher the stories hidden in data. We sat down with product expert, Nayan Madhamshettiwar to understand how AI is shaping the future of wealth management.

Q: What’s the most important thing when it comes to developing AI solutions?

A: “In order to build the right AI model, we need a Deep Domain Expertise and Horizontal Business Knowledge. At First Rate, we understand the economics behind the data and believe that signals are more important than developing complex technical solutions and algorithms. Furthermore, we follow the “law of parsimony” and keep the dataset size close to the minimally appropriate, which is crucial. Having more data is not necessarily a good thing if data is not properly stored, cleaned, managed, crunched, and last but not least, understood. It is mainly a matter of process and business know-how. We are creating a data-driven organization where the whole wealth management process is empowered by the data life-cycle. Hence, it is a firm-wide process. The main benefit of this approach is that business decisions driven by financial data analysis are easily spread around the organization in a transparent and multidirectional way. In addition, the data-driven process is not static, but dynamic. It means that the organization can learn from feedback, adapting faster to the changing business environment.”

Q: In What areas can AI and NLG Help the Wealth Management Industry?

A: “Wealth management firms must embark on a technology initiative to incorporate advanced NLG capabilities into their data analytics platforms to provide effective client communication and enhanced internal operational efficiencies. The key functional areas where wealth management firms can deploy NLG capabilities are:

• Relationship management: NLG systems can provide advisors with pre-generated discussion points for upcoming client meetings, which reduces the preparation time and effort. This pre-generated meeting agenda can contain information such as client investment objectives, risk profile, portfolio performance, investment recommendations, market insights, and house views. Based on this information, advisors can create customized plans and reports for clients.

• Compliance and reporting: The advanced capabilities offered by NLG systems will allow compliance teams to quickly identify the discrepancies embedded within the data and raise alarms in a timely manner. The finance function generates MIS reports by aggregating data from multiple sources. NLG solutions optimize this process by providing access to meaningful information and considerably improving the quality of MIS reporting.

• Operations: By automating the process of aggregating data from multiple sources and deriving insights from it, NLG systems can help firms improve internal operational efficiencies.”

Q: What does the future look like for AI technology?

A: “Even wealth management firms that are starting to adopt best-in-class data analytics applications may find that manual processes still hinder their ability to fully leverage the financial insights embedded within data. Advanced NLG technology offers a great opportunity to overcome this shortcoming. By integrating NLG capabilities with other visual formats, wealth management firms can convert insights into human-sounding narratives to deliver an advisor-like experience to customers. Relieved from manual data analysis, relationship managers will be able to focus on business development activities vital for growth and survival.”

For more information on how First Rate is implementing AI into our solutions and services, contact us today at [email protected].