Use of AI in wealth management must be applied smartly; not simply for the sake of it, warns M-Files

Use of AI within wealth management has the potential to revolutionise a sector struggling with digital change, but according to Tim Waterton, VP of UK Business at M-Files, any use of automation must be applied smartly and not simply for the sake of it.

The wealth management sector is facing a growing need for technology-led change, driven by a new generation of wealth. AI could hold the answer, but many wealth managers are struggling when it comes to implementation.

A recent poll amongst 500 private wealth executives shows that AI represents both a major challenge and opportunity, with over a third (36 per cent) of respondents admitting they have struggled to capitalise on the technology. Waterton agrees that AI has the potential to transform the way wealth management professionals deliver services to clients and streamline their processes, but also advises caution relating to over-automation:

“New wealth is driving change in the wealth management industry. Historically, personal service has often acted as a driver for loyalty amongst High Net Worth Individuals (HNWIs), but the emergence of the millennial generation is shifting priorities.

“NextGen HNWIs have grown up with instant access to information and see cutting-edge technology tools as a basic requirement for any investment scenario. The emphasis is on the wealth managers to provide the resources to meet these demands, but the evidence shows that many are not doing this. Not only is this frustrating for investors but also for staff of those wealth management firms.

“Like NextGen HNWIs, millennials coming into the wealth management industry are digitally savvy. As digital natives, they are incredibly ambitious, wanting to move into managerial positions much faster, and aren’t afraid to change jobs to achieve this. They will want their employer to match their ambitions and will be unimpressed having to navigate cumbersome, inflexible technologies which hold back their productivity.

“AI can offer a solution to these problems by helping to automate on-boarding processes, provide smarter access to data and create new customer experiences. However, it’s critical any implementation be undertaken smartly. It shouldn’t be a case of automating for automation’s sake. Because of this we see the use of AI best applied in small-steps.

“This starts with automating and streamlining manual processes, such as onboarding a new client. This could include all forms of engagement from initial communications, anti-money laundering checks, risk profiling, and all the legal documentation in between. Additionally, by using intelligent information management solutions, staff have the means to simplify how they access, secure, process and collaborate on documentation. Doing so will aid productivity, enabling staff to find and access information across their systems much faster so they can build stronger relationships with their clients.

“The millennial generation is shaking up the wealth management industry. But for a sector typically slow to change it’s important organisations don’t sit back and let technologies, like AI, pass by. It risks NextGen HNWIs switching to more progressive rivals. Equally, a gung-ho approach of automating every process is also not the answer. It’s important to strike a balance which enables information to be managed, secured and shared in an efficient and intuitive manner. Doing so will not only provide investors with much needed visibility over the health of their wealth but also provide those digital natives entering the wealth management industry with the tools needed to perform their roles to the best of their abilities,” Waterton concluded.

Author: Yash Hirani

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