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Gen AI is revolutionizing wealth management by accelerating innovation. Ultimately, this is leading to increased profit margins and improved customer experience. Notably, prominent wealth managers like Morgan Stanley have embraced Open AI’s technology to elevate their wealth management services, setting a trend with others following suit.
As Gen AI picks up pace, exploring areas for quick transformation is a critical step wealth management firms can take. Now is the time to integrate Gen AI into your IT landscape to gain a competitive edge. So, let’s dive in.
Today, Gen AI is already in common use helping professionals generate quick replies to emails, create summaries from analysis reports, and run quality checks on language-related tasks.
However, in the case of financial advisories, Gen AI’s powerhouse is financial information—safeguarded legacy knowledge banks that have been built over the years, and colossal amounts of big data from real-time financial, market, and customer analytics.
Gen AI breaks down, summarizes, analyzes, recognizes patterns, generates insights, and draws inferences from these data sources to assist in tasks as simple as drafting summaries to sophisticated activities such as building strategies for customer loyalty.
Doing these faster, and at a large scale will shift the role of Gen AI from personal assistant to data powerhouse that is a linchpin for your wealth management firm. Let’s explore.
To effectively navigate the evolving landscape of wealth management, CIOs must concentrate on four pivotal areas:
McKinsey revealed that in the first three quarters of 2022, client assets sharply declined by 16 percent, and net flows moderated from 2021 highs. But revenue growth for the industry was 4 percent, and margins have improved by 0.4 percent, driven by sustained interest rate increases throughout 2022.
A sharp increase in short-term interest rates has affected the number of assets under management (AUM) by wealth management firms. The resultant decline in AUM has led to a decrease in revenue. In such unpredictable scenarios where unforeseen events drive market volatility, CIOs can still take proactive measures to optimize operations and improve profit margins.
Gen AI helps fortify operational capabilities and sustain and grow margins, allowing wealth management firms to modernize their operations and change their outlook on efficiency. Here’s where Gen AI comes in:
Gen AI summarizes dynamic client communications to help highlight customer preferences and behaviors. A comprehensive understanding of client feedback, market analysis, and client goals helps advisories to make informed decisions for product and service innovations.
Here’s how Gen AI can be leveraged for innovation:
Gen AI can play a pivotal role in reshaping go-to-market strategies. Advisories leverage this capability to create highly personalized marketing and sales campaigns, reshaping the approach towards potential clients. Gen AI accelerates go-to-market processes by:
Excelling in customer experience is a continuous endeavor to foster loyalty and retention, ensuring customers stay engaged and satisfied. Gen AI enhances the customer experience with:
Gen AI is poised to become a pivotal force in the evolving wealth management landscape, offering transformative opportunities for the industry. Through quick integrations and building towards the culture shift to embrace Gen AI, wealth management firms can optimize operations, drive innovation, enhance customer experiences, and improve profit margins considerably.
Firms that embrace these capabilities will maintain their competitive edge.
About the Author
Lakshya Saluja
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