This WealthTech Social discussion in Singapore was, with our support, hosted by John Choi, Managing Director, First Rate and Francis Oh – APAC CEO of Qraft Technologies. They discussed the role that Artificial Intelligence (AI) can play in enhancing the investment process and how firms could successfully incorporate it into their everyday operations.

Singapore is enjoying a boost in its reputation as an innovative financial centre. Recently voted the third most innovative place in the world for innovation and the third most exciting place for FinTech in the recent Techstars survey, Singapore has much to offer and lots to look forward to.

More broadly, the industry as a whole is proving to be fast-moving and evolving to meet future needs. The launch of the Apple wallet, social media influencers, and the rise of an ecosystem of embedded products and services; all came up in the discussion as points of interest and things to get excited about.

Chandrima Das, Tech Founder, Startup Investor, and Business Builder, commented: “There is a lot of interest in and excitement around innovation within financial services, particularly within the FinTech sector. But what will really make a difference is higher levels of trust and confidence around using some of the new products and services on offer as well as leveraging new delivery channels.”

She brought up the role of social media influencers as a force for good and one that aligns well with a younger generation of investors who tend to form opinions around things based much more on their peers and community than their parents – who were more reliant on “experts”.

“Influencers who talk about financial products and have good content and a positive message can do much for financial literacy and empowerment. Good ones are very content-driven and give out plain and simple messages about managing personal finance,” she says.

Samuel Rhee, Co-Founder Chair and CIO at Endowus, Dallas, agreed, saying that the integration between wealth management and technology can take many forms. “It is all about the user experience and lowering cost, so make access to advice tenable,” he said.

He gave particular focus on AI and the role that it can play when it comes to upping client experience and satisfaction – without incurring a massive uptick in cost to serve.

“AI can really help when it comes to personalisation based on risk appetite, goals, preferences, and other inferences will become everyday and a normal element of financial advice. It could be beneficial for an ageing population with differing retirement needs, savings levels, and life expectancy. Everyone’s needs are different, and the advice they receive should reflect that,” he said.

Using AI to determine ESG levels is another case use. Indeed, ESG personalisation is particularly interesting because everyone has a slightly different take on what is important to them. As yet, the industry does not really have a taxonomy to match investor preference and asset allocation.

Rhee thought that Chat GPT was the other big trend. “Here, the next step is how exactly to leverage it to provide a better user experience- particularly in terms of customer education and empowerment.”

The need for AI to have specific case uses and to solve specific issues and pain points was raised. It is best used, it was thought, as a part of something else in a supporting role, as opposed to an end in itself. 

Francis Oh, APAC CEO at Qraft Technologies, gave an interesting example of this in action. “We see smaller scale entities that tend to struggle with portfolio construction and the resources to bring their solutions to their clients; for example, investment criteria, risk tolerance, and all the other components that come into play when allocating, as well as a systematic approach to risk management – all of this can be improved upon by using AI,” he said.

Jinesh Patel, Partner at Integra Partners, pointed out the risk of all asset managers using AI and how that could lead to herd-like movements within the markets. “This convergence could end up being a systemic risk, and so it is important to keep the value that a human brings in terms of intuition and other variables such as bias,” she says.

Another use case is in doing the heavy lifting. Patel explains: “AI can be used to do the heavy lifting and free up humans to do that value add. For example, AI could be used in place of junior lawyers to pull out the nuances between lots of similar new issuances. It is all about helping the human, not replacing them.” 

Indeed, AI is one enabling tool, but it cannot be the only decision-maker in a complex world. Its value lies in spotting the needle in the haystack, but its use as a supporting player, as opposed to being the leading actor, cannot be emphasised enough. 

Oh commented: “It’s good to look at it as an alternative and additional tool for decision making but not the only one. Many professional asset managers are resistant as they see it as hard to understand and a threat to their roles. The moment will come where there is greater visibility over its value and use, and people will become more accepting of it and embrace it as its use becomes more commonplace,” he says.