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BLOG. 2 min read

Know Your Value: AI in Asset Management

Artificial Intelligence (AI) is hot right now! So hot, in fact, that one can hardly read an article—whether related to asset and wealth management or not—without it being mentioned. So it was no surprise to find yet another AI-related news article titled “Salesforce, Deloitte Digital team up for generative AI.” There was a quotation that was more intriguing than the partnership:

"Today every organization must become an AI-first company to compete, and that can only be done by adopting technologies rooted in trust and transparency." Salesforce AI CEO Clara Shih[1]

Not such a hot take from the CEO of a company offering such a product…but maybe not as true as many might think at first blush. It brings to mind the value disciplines laid out in “The Discipline of Market Leaders”: customer intimacy, product leadership and operational excellence.[2] Essentially, the theory states that any successful business needs to maintain at least "acceptable" levels of performance in each of the three dimensions, but would need to choose one of them to become a market leader in its field.

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So where does AI fit into this framework? Well…it doesn’t! This is because AI—and any technological innovation—will span all three dimensions. There are AI applications to improve all areas of potential market leadership.

So does every asset manager need to be an AI-first organization? Or can asset managers find their unique area of market leadership and use AI (and other technologies) in a prudent and disciplined way to enhance their leadership positions?

That’s a tough one an answer so let’s do what we all do these days, ask ChatGPT. When presented with the question “Do all asset managers need to use AI?” ChatGPT responded with a lengthy response that included the following:

“No, not all asset managers need to use AI (Artificial Intelligence). The use of AI in asset management is a relatively recent development and is not a requirement for all asset managers.

…While AI can provide valuable insights and improve decision-making processes in asset management, its implementation depends on various factors, including the size and complexity of the firm, the investment strategy employed, and the available resources. Some asset managers may choose to utilize AI technologies to enhance their investment processes, automate tasks, or gain a competitive edge, while others may rely on more traditional approaches.

It's worth noting that AI is just one tool among many that asset managers can leverage…”

Even ChatGPT understands the importance of staying focused on what makes a given firm unique and competitive. While it’s critical for all leaders in asset management to adopt and implement new technology, one should not forget what makes you special.

Putting focus on how AI—and other tech—can improve your value disciplines is essential. Don’t mistake technology for a stand-alone value discipline, but rather an enhancement to what you have. By leveraging AI and other tools strategically, asset managers can augment their existing expertise, streamline processes and gain a competitive edge while maintaining their unique value proposition in the market.

We write regularly about the implications of AI and other technologies on the asset and wealth management industry in our research reports. Contact us to learn more.

 

[1] https://www.foxbusiness.com/technology/salesforce-deloitte-digital-team-generative-ai

[2] The Discipline of Market Leaders (1995) Michael Treacy and Fred Wiersem

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