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Rethinking wealth management - combining AI, Blockchain, and Big Data

By Lombard Odier Group from the Swiss WealthTech Landscape Report 2024

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by The Wealth Mosaic
| 19/04/2024 11:00:00

Laurent Pellet, Limited Partner and Global Head of External Asset Managers at Lombard Odier Group, explores the extent to which technologies will combine to transform the External Asset Manager (EAM) space.

In an ever-changing world, Artificial Intelligence (AI), Blockchain, and Big Data are opening up fascinating new prospects for external asset managers (EAMs). These tools hold the key to a potential revolution, promising to reshape the wealth management landscape as we know it. But the question on everyone’s mind is: can these cutting-edge technologies really propel EAMs into a new era, enabling them to redefine the essence of client-centric value creation?

In this complex financial sphere, the spotlight is turning to the central role of technology. Will the fusion of AI, Blockchain, and Big Data open a new chapter in the history of wealth management, or will it be no more than a fleeting promise in an ever-evolving landscape of possibilities?

The power of AI
A star of the digital age, AI is poised to redefine the rules of the game for asset managers. Thanks to its data-processing capabilities and predictive capabilities, AI is enabling asset managers to explore previously unchartered territory in terms of investment strategies and client services. For example, we can imagine cutting-edge, AI-powered predictive analytics that refine investment decisions down to the smallest detail, offering clients precisely crafted and personalised strategies. It is comparable to having a team of financial experts, data scientists, and market analysts on standby, 24/7, to help the asset manager make decisions.

But the power of AI goes far beyond portfolio management: it enables us to reinvent the customer experience, empowering EAMs to offer an unparalleled level of personalisation to their clients. Indeed, AI can analyse vast data sets to better understand individual preferences, risk tolerances, and financial goals. This information also helps advisers develop investment strategies that perfectly match their clients’ needs. This level of bespoke service was once considered unattainable on a large scale.

AI is not just a buzzword; it is a profound transformation of the financial landscape, ushering in a new era of precision, personalisation, and risk control.

Big Data and portfolio optimisation
The power of AI rests on the fuel that it is fed, and to that end, data has quickly become the fuel that powers the AI engines. Indeed, the digital age has unleashed an avalanche of information, offering EAMs a goldmine of opportunity.

But another facet lies in Big Data analysis, which is the catalyst for converting this raw data into actionable, high-performance strategies.

Leveraged optimally, EAMs can now have real-time access to a dashboard displaying market dynamics, client preferences, and emerging opportunities. This valuable information enables them to navigate with precision, harnessing Big Data to make better, faster decisions.

Blockchain technology and security
Yet, as technology continues to evolve at a rapid pace and the possibilities afforded by complex AI-powered Big Data analysis and predictions, EAMs are faced with another issue. Indeed, protecting that data is a crucial task and adapting cybersecurity measures to counter these evolving threats effectively is a must.

Safeguarding sensitive data, fortifying networks, and implementing cutting-edge encryption techniques are imperative for protecting against potential vulnerabilities. The integration of advanced cybersecurity protocols has now become an absolute necessity to ensure the resilience and integrity of financial systems.

Derived from cryptocurrencies, however, Blockchain stands out for its decentralised architecture and robust data security. EAMs can rely on its reliability to protect the most sensitive data and optimise transactions with unprecedented precision.

The adoption of Blockchain promises to transform the way data is managed and secured, representing a major turning point in EAM practices.

The future of EAMs, therefore, lies at the intersection of AI, Blockchain, and Big Data. The question is no longer whether their practices can be revolutionised but how quickly they will achieve it. The race is on.

Interested in reading the full report? You can read this edition of the Swiss WealthTech Landscape Report 2024 online here.