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Artificial Intelligence: Charting a new course for financial wellness

Adoption of digital technologies will become the most effective tool for incumbents and new players to build and sustain a competitive edge.

July 08, 2019 / 06:37 PM IST

Pramod Singh

The past few years have been a race for relevance for wealth managers, with the financial services sector undergoing massive changes. Customer expectations, regulatory developments and the increasing impact of technologies are driving a paradigm shift in the market. Therefore wealth management organizations are assessing their growth strategies and identifying ways to capitalize through new opportunities such as deployment of Artificial Intelligent (AI) led solutions.

There has also been a constant transformation in investment patterns, customer awareness and subsequently customer expectations from wealth managers in the Indian market. For instance, a lot of Indian investors are now relooking at their investment priorities, with many of them willing to consider beyond traditional financial asset classes such as Fixed Deposits, gold and assets —to more sophisticated instruments of investment. This trend will likely lead to more innovation, increasing risk appetite and overall growth in the ecosystem.

Amidst these evolving trends, wealth managers, across the globe, not India alone, are challenged with tons of data generated, that they need to decipher to keep abreast with market and customer requirements – i.e. news from media, trading insights, regulatory trends, company developments and so on. This has led to wealth advisors proactively adopting AI to support them in deriving insights from information.

  • AI for personalization and engagement: AI can help financial advisors to gain insights for their clients and provide personalized recommendations by taking into account clients’ goals, trends in financial trading and risk appetite. For example – AI can track media news and alert wealth advisors regarding market events and regulations that can benefit the clients.

  • AI for future trends and growth: Let’s take this a step further, with support from AI/ML based approaches, wealth advisory firms can train their models to correlate between events (such as new IPOs or annual reports) and past choices of the customer. The software may then prompt advisors when similar opportunities arise in the future.

  • Better client profiling: wealth advisors can also use AI to create profiles of clients. They will be able to generate and maintain profiles with ML and natural language processing (NLP).

  • Decrease customer complaints: AI can enable an assessment of frequent complaints and support resolution of these issues and increase the overall customer experience. This process can also support mapping a suitable wealth manager to a client based on traits and nature of complaints.

  • Risk Management: Advanced algorithms can complete analysis of unstructured data, without expensive resources, within minutes or even seconds. This allows wealth managers to focus on their clients better and manage client risk assessment simultaneously.

In India, it’s encouraging to see that AI is already a key investment area for banks and financial services companies.