With hype around Artificial Intelligence dominating conversations across all industries at the moment, Financial Services is one of the sectors that is most talked about as a target for the technology’s transformative power. Finance has long been a domain of huge IT investment, technology-based competition, immense data generation and increasingly automated or electronic business processes.
Private Wealth, however, is a special case within finance, with a unique set of challenges and opportunities. Perhaps more than any other area, Private Wealth is a relationship business. High net worth clients and their representatives need to feel confidence not just in the institutions they deal with, but crucially in the individual advisors and managers who steward their assets. No high net worth client wants to feel like their trusted relationship manager is being replaced by a chatbot, however deferent and personalised. Indeed, there’s a strong likelihood that private clients will demand a more human-centric type of service when robo advisors and automated services become the norm in retail banking, and on investment platforms targeted at consumers.
Combination of human expertise and AI systems is a powerful strategy
At Silo.AI, we believe in focusing on deploying advanced technology to support expert human decision makers – the so called “Human in the Loop” aspect of artificial intelligence. While AI-driven automation is perhaps the biggest observable trend across many industries right now, we see the combination of human expertise and machine-driven insights as a vastly more powerful strategy than automation alone, especially in areas like Private Wealth, where a human face is a defining component of the client strategy.
Concrete financial AI solutions that would work for Private Wealth
Client-facing applications exist across all three core disciplines of AI expertise at Silo.AI: Natural Language Processing, Computer Vision, and Machine Learning. We have recently deployed a number of tools using proprietary language techniques to great effect, detecting sentiment in news headlines with demonstrated predictive power for price movements. Our other applications have included the automatic detection of risk-critical passages from large legal documents, thereby freeing portfolio managers and investment advisors to spend less time reading redundant sections, and more time seeking alpha. Many of the same techniques have applications that generalise across huge swathes of the Private Wealth sector.
Machine Learning can be used to support the strategic insights of human experts, powering smart trade-management and portfolio monitoring tools, for instance in scenario analysis and risk monitoring. Where ML is deployed for automation, it will be with the intention of reducing the amount of dead time spent performing merely clerical tasks or augmenting their investment processes, freeing high value employees up to be even more productive.
Gathering real time or near real time “alternative data” is an interesting application of Computer Vision techniques, with the potential to derive market intelligence from satellite images of crops, from real time retail activity, weather patterns, traffic in shipping lanes, and so on. No longer should private clients need to rely on backward-looking indicators to drive forward-looking investment decisions.
These tools could either be used by a hands-on client, or used to support the investment thesis proposed by the relationship manager. An additional set of components would be used in the construction of personalised structured products or investment vehicles, tuned by the relationship manager’s input, and based on their intimate understanding of the client’s objectives. Robo advisors that won’t displace the role of a relationship manager, but that will optimise strategies based on years of nuanced understanding of clients and their priorities.
In Private Wealth, personalised relationship between people matters
The core function of all of these client-facing applications is to enhance the client’s investment edge, and crucially to cement their perception that their Wealth Manager provides them with the most cutting edge technological resources, to protect their portfolios and maximise returns, giving them an edge over even the largest financial institutions. Our focus is on augmenting and personalising the trusted relationship, rather than automating it.
Along with these client-facing tools, the suite of AI-driven internal applications includes advanced CRM systems to monitor client interactions and investment decisions, and to help provide predictive insights to relationship managers. CRM systems that monitor client interaction data and tie it to investment activity can help managers to provide a better service to their clients, and to monetise opportunities when they arise.
While fully automated marketing is unlikely to gain much traction in the highly interpersonal world of Private Wealth, many of the techniques that support automation in other industries can be deployed to help relationship managers to better guide and monitor client activity. A manager with deep, machine-learning derived insight into his clients and their investment behaviour, and natural language processing analysis of their communications, will be better able to foster relationships that will last for decades or even generations. Intelligent assessment of client behaviour will also protect Private Wealth firms from compliance and regulatory liabilities, providing more robust KYC and AML frameworks, especially for clients deemed politically sensitive.
Human in the loop solutions for Private Wealth
In conclusion, Private Wealth is an extremely rich area for the development of the “Human in the Loop” processes at the core of the working philosophy here at Silo.AI. We see huge opportunities for forward thinking institutions who don’t risk their brand by deploying generic, depersonalised automation, but who carefully use smart tools to augment existing reservoirs of expertise and relationships at the core of their platform.
To learn more about our unique approach to AI deployment in Private Wealth, and across other areas of finance from Trading to Impact Investing, send me a mail at email@example.com.