If the news of wealth management disruption emanates out of Zurich, you might as well sit up and listen. One would certainly try and find out what is it all about; any new model of wealth management from its mecca. Generally, new models / systems never hit the public domain. The current news regarding wealth management comes from a top official of Microsoft. You guessed it right, the disruption is round the corner in this sector, a preserve of the select few so far. The prophetic yet now seemingly very doable action statement from Martin Moeller, head of AI & GenAI for financial services, EMEA, Microsoft, sets the tone.
Martin Moeller said “AI’s ability to condense financial data will allow just a few people to offer services that previously occupied entire teams in a bank.” This capability is the arsenal for a nature of disruption in wealth management, which we cannot even imagine of. First and foremost is this technology’s potential to process information vastly reduces the hurdles required to compete with established banks. The moat seems to have been done away with, at the tech level already, it has to be made a reality, at the operational level. Given the bounty it has set for its pioneers, it would have an army of exploiters of this opportunity.
Either you do it or somebody else will. If you have the domain expertise, AI is waiting right for you. How will AI reshape the competitive landscape? What it will do is to significantly lower the threshold for market entry for startups. The analogy dates back to decades ago with the onset of digitalization and the internet wave. One already successful use case can send a chill down your spine. Since early 2024, Swedish payment provider Klara has been using AI from Microsoft’s partner OpenAI which performs the work of 700 employees. UBS CEO said AI would boost productivity and make jobs easier.
The costs for entry of newcomers would get drastically reduced as a consequence it would be easy to try your hand. Two remarkable trends are likely to shape, first, banks could enter the business of wealth management with the help of AI without having to spend much on customer advisors. Second, the customer behaviour is likely to change with “young entrepreneurs increasingly willing to manage their investments themselves.” Now customers need to be provided with complex information 24 hours a day and seven days a week. The will become a thing of the past. The next step would be Agentic AI advising on products and specific investment decisions.
WHAT IMPACT INDEPENDENT DECISIONS WITHOUT HUMAN INVOLVEMENT WOULD ENTAIL IS ANYBODY’S GUESS?
Sanjay Sahay
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