Artificial Intelligence (AI) has emerged as a powerful tool for managing complex and dynamic systems and has solidly integrated itself into the financial services industry, asset management in particular. As the technology develops, it is increasingly being harnessed to streamline, automate, and optimise asset management, making it smarter, more efficient, and cost-effective.
AI could increasingly become indispensable due to the enormous volumes of data involved and the high stakes we face when trading the financial markets. The global market size for AI in asset management was valued at USD 2.61 billion in 2022 and is expected to grow 24.5% annually from 2023 to 2030.
A Wider Spectrum of Possibilities
The financial services industry as a whole and the asset management field, in particular, are seeing significant uses for AI. This is thanks to its capacity to process large volumes of data faster and more accurately than was previously ever possible.
AI systems can now monitor asset performance and market direction in real time in order to escalate potential issues or engage directly with the market to balance clients’ portfolios. Such capabilities could help tremendously in managing risks for clients and improve operations as it is estimated that AI could increase productivity 13.8%, AUM 8.1%, and revenue 7.7% for asset management firms that adopt it.
Data processing, sentiment analysis, and predictive analysis are important fields of development for AI in finance as they can facilitate performance-based services and improve decision-making.
Systems like robo-advisors are increasingly popular as they provide automated, algorithm-driven financial planning services with little to no human supervision. They analyse market trends, historical data, and investor risk profiles to create personalised investment strategies, offering a more affordable, accessible, and efficient alternative to traditional human advisors.
Leveraging AI to Improve Its Value Proposition
Due to its numerous advantages, we use artificial intelligence to manage part of our operations, in particular in regard to interfacing with financial markets, portfolio management, and risk management.
Our systems are used to monitor the market for relevant signals/events and generate relevant alerts for us to handle. This helps us keep track of the different markets we are investing in without having to manually monitor them all at all times. Removing this tedious process enables us to concentrate on the part that provides the highest value to our clients, which is our strategy.
Our alert generation system triggers rebalancing operations of our clients' portfolios. Alerts can also suggest investment opportunities that are evaluated by our team. A significant part of our asset management process is handled by humans to ensure that clients' portfolios are securely handled and to enforce the coherence of our trading strategy.
Upon our green light, automated systems take over to execute the necessary trades and distribute assets in a balanced way across managed portfolios. This process exposes our clients’ portfolios to the performance of different asset classes from forex to stocks, metals, and others covering various regions around the globe in order to maximise profits and limit risks.
What Lies Ahead for AI
While AI’s rapid progress and its growing capabilities could increasingly replace humans for various tasks, the human touch remains important for us as we provide expertise and strategy at the backend. AI systems are also error prone and require human verification in particular in our field where large sums of capital are at play.
Other challenges remain around data privacy, data quality and the underlying algorithms among other things to establish a safe, reliable and secure infrastructure for an AI to provide a strong performance.
Moreover, as AI takes on more responsibilities, the need for transparency and explainability in its decision-making processes has become paramount. These could be critical factors for a more in-depth adoption of the technology in the financial industry as a whole to ensure its credibility.
Overall, we could see a rapid increase in the use of AI in various financial markets in general and asset management and trading in the future. The forex market could be particularly promising for the technology due to its sheer size, large trading volumes, geographical reach, and trading hours.
AI Augments Humans
Human capacity remains limited and AI can help in this regard. AI remains a tool that has to be well understood to be used to its fullest capacity in an efficient and secure manner. We believe that AI can help leverage our expertise in asset management and help us provide better performances for our clients.
As we navigate through the challenges and refine the technology, the role of AI in asset management will undoubtedly continue to grow in light of the tremendous size of the assets under management globally, valued at USD 98 trillion in 2022.
