How Financial Services is Consuming AI

Jun 26, 2018


There is a dark side to AI. Deep thinkers – including technologists who are hip deep coding AI solutions are looking ahead to what AI can do to the human race. It is one thing to think that the next world war will probably be fought in technology – through cyber-attacks; it is another to contemplate that we may be creating a force that may be more intelligent than us and may do evil. Elon Musk and Mark Zuckerberg have been debating this, and are on opposite sides. It is interesting to note that although the issue is being raised, it is not slowing down the massive investment in AI progress.

The premise of the HBO series WestWorld, is that a futuristic theme park has created hosts who are amazingly realistic humanoid robots that are for the entertainment of human guests. In the second season, the hosts are rebelling and taking over. The creators of the series have joined the chorus of people warning about AI technology being created without social responsibility.

Anyway, enough glass half-empty thinking! In this post Russ Kliman, our Head of Strategic Programs & Innovation will pick up on the last post where he defined AI and moves into how it is affecting advisors and financial services.

How AI impacts the delivery of wealth management is the key to leveraging its power Click To Tweet

AI in Financial Services

In my last post about artificial intelligence (AI), I not only discussed ‘what’ AI is, but more importantly ‘how’ it is impacting almost every industry and the entire value chain of product and service delivery. Financial services, and more specifically wealth management, are some of the key industry segments in which significant investments and disruption is occurring with artificial intelligence.

While we all have seen the emergence of chat bots – AI-enabled technology which provides real-time automated text chats for service, questions, or even advice – the implementation of AI within financial services extends well beyond chatbots. As an industry, AI in financial services is impacting the entire value chain of service and product delivery, including:

  • Credit scoring and lending
  • Regulatory, compliance, and fraud detection
  • Quantitative and asset management
  • Market research and sentiment analysis
  • Business finance and expense reporting
  • Insurance
  • Debt collection
  • Predictive analytics

In a recent survey by The Financial Brand (October 2017), financial service executives were asked what their major business drivers were for AI implementations.  For 95% of the respondents, enhancing the customer experience was either very important or extremely important.  And 74% cited reducing costs as either very important or extremely important. The question now becomes: How can AI – specific to wealth management – impact the client experience and help in reducing costs? The best way to unpack the opportunities is to look at the key domains of services (the wealth management value chain) that are needed to deliver wealth management – front, middle, and back office, combined with regulatory, compliance, support, and analytics.


RPA: Robotic Process Automation. AML: Anti-Money Laundering. KYC: Know Your Customer.

The takeaway from this view is that AI is impacting the entire value chain of wealth management delivery, and much of the impact won’t be perceived by the end investor as AI. Their experiences can be enriched by more personalized content. The management of their portfolios can be informed by AI-enabled research and recommendations. And the processing of their transactions can be supported by AI-enabled robotics. In short, the end-investor – apart from the occasional chatbot – may never “see” AI.

For financial advisors, the most important aspect to recognize is that AI is not a ‘thing’ in and of itself, but something that can – over time – become embedded within all of the technologies that are used to deliver products and services to end investors. At the same time, AI can have a material impact on advice delivery, the cornerstone of the financial advisor. AI can power advice delivery in three key ways:

  1. it can learn from millions and apply the learning on a personalized basis
  2. it can uncover insights in data/information that are beyond the capabilities of a single individual and,
  3. it can transform client experiences by delivering personalized experiences.


The take-away is that AI is not (at least not yet) replacing the financial advisor. AI within wealth management has the power to transform the industry, because it can:


  • Supercharge experts – it can help wealth managers and financial advisors gain more insight, meaning, and understanding of the vast amounts of data (both structured and unstructured) to deliver financial advice and support their client’s objectives.
  • Democratize expertise in the enterprise – in larger firms, it can take specific domain expertise often centralized within a single or small group of individuals and make that knowledge and expertise available to the enterprise. At the same time, external expertise can also be democratized to enable smaller organizations to share that expertise.
  • Differentiate commoditized services – through the implementation of AI (and the subordinate elements of machine learning), commoditized services that can be enhanced to become smarter and deliver increased value to the financial advisor and/or the end investor.
  • Enhance and enrich client engagement – though the use of AI-enabled end investor portals, AI can deliver insights into end-investor sentiment, and can deliver personalized content and experiences.
  • Deliver personalized advice at scale – AI can synthesize data across the entire spectrum of information needed to deliver advice to clients, including intimate knowledge of the client’s situation, product information/domains, and global market insights. AI can review, synthesize, prioritize that information and provide personalize client recommendations to the financial advisor at tremendous scale.

The key take-away is that AI is already impacting all industry segments, including financial services and wealth management. Understanding what AI is, and more importantly how it is impacting the delivery of wealth management is key to leveraging its power to help increase growth, minimize costs, and reduce risk.

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Raef Lee

Raef Lee

Raef Lee is the technology contributor for Practically Speaking and also serves as a managing director for the SEI Advisor Network.

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