Embracing AI data transformation in asset management

3 April 2024
| By Jasmine Siljic |
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Asset managers who implement artificial intelligence (AI) into their holistic data strategy are seeing higher revenue growth, customer satisfaction and new client acquisition.

According to KPMG’s Frontiers in Finance report, AI-driven data and business models are critical factors in driving long-term success for asset managers.

The firm identified six broader categories where AI can be applied in asset management:

  • Chatbots
  • Data governance
  • Parsing documents
  • Image analysis
  • Visualisation
  • Software development

Firms with a holistic approach to data reported on average a 19 per cent increase in revenue growth, a 24 per cent increase in customer satisfaction, and a 19 per cent rise in new client acquisition.

“Looking ahead, the agility to integrate new technologies into the ecosystem will become critical to transforming asset managers’ operations and offerings,” the report said.

However, asset managers say they are struggling to integrate new technologies with legacy systems, develop the agile infrastructure they want and maximise the value of internal and external data, the paper wrote.

Citing a recent State Street survey canvassing 520 institutional investors, KPMG revealed a “worrying absence” of holistic data approaches, with two-thirds of institutional investors lacking an overarching data strategy. Moreover, the average institution needs to upgrade almost half of its existing technology to meet its data goals.

Dean Brown, UK head of asset management consulting at KPMG, emphasised the importance of implementing a robust data strategy to drive efficiencies.

“AI’s impact on the industry is potentially profound in accelerating the delivery of tailored products to market – at speed, scale and with much less manual effort,” he commented.

Interestingly, research from Mercer last week found that asset managers are divided on whether AI will positively affect revenue and assets under management (AUM).

Of those who already use AI, 46 per cent said they anticipate it will increase revenue and 46 per cent think it will increase AUM. For those who anticipate using it in the next five years, 45 per cent expect it will increase revenue and 43 per cent expect it will increase AUM.

Meanwhile, the vast majority (93 per cent) of both groups expect it will increase productivity.

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