In this series, The Wealth Mosaic interviews senior executives from leading wealth management firms, solution providers, and WealthTech influencers to learn more about them, their journey, their perspectives on the market, and how they see the future of wealth management.

TWM: There is a lot of talk about Artificial Intelligence (AI) today – not just in financial services, but more broadly. What do you think the potential for application of AI is in this sector today, at a high level?

Dr. Alexander Cassar: The days when financial service providers hesitated to embrace artificial intelligence are long gone! Banks, wealth and asset managers have recognised AI as one of the most strategically essential technologies for the industry. However, it still seems to be a challenge for many players to operationalise AI effectively in their business.

The general willingness to invest is high: according to market data and researches available to Objectway, 83% of banks have already invested in AI and plan to increase their spending over the next two years. But the questions firms need to be (and are) asking themselves are, how they can monetise investments in AI to deliver not only a financial return, but also, how these investments can deliver an improvement in service, in client experience, among other areas?

And when it comes to investment in AI, the industry is betting the farm! The retail banking industry is expected to spend an estimated $4.9 billion on Artificial Intelligence (AI) by the end of this year, which is a growth rate of 21.8% from 2019, according to a study by GlobalData. The big question is not so much how much will be invested, rather, where – and with what impact?

Financial institutions today are using AI mainly to increase operational efficiency, and not necessarily to generate revenue. A survey of decision-makers for data and analytics technology in banking found that 68% of respondents used AI to improve the efficiency of IT and business operations. In addition to this, however, there is another significant investment target: the personnel expenditure tied to AI. In contrast to the likely risk of downsizing, companies are more concerned about their staffing efforts related to AI and machine learning, according to Objectway. A lack of specialist knowledge is at the top of the list of challenges for firms using AI. The war for AI talent is raging! Market surveys found that 31% of respondents believe it is necessary to retrain existing employees, while 27% think that they need to hire new employees to handle the new technologies properly. Investing correctly now could prove beneficial in the longer-term: in the financial services sector, generative AI has the potential to generate a value of 200 to 340 billion US dollars. This represents a share of 2.8 to 4.7 percent of total industry turnover. An enormous gain.

TWM: Can you give some concrete examples of how AI can / is being used, and with what impact?

Dr. Alexander Cassar: To target client segments that are not yet fully covered, such as the affluent and the younger generations, technology is crucial. By harnessing artificial intelligence and machine learning algorithms, financial institutions can analyse large amounts of data to understand individual preferences, risk tolerance and financial goals, thus tailoring offers to specific needs. In addition, user-friendly interfaces and mobile apps are essential to engage younger demographics accustomed to seamless digital interactions.

Education and accessibility also play a crucial role. Using technology to provide reliable and understandable financial education resources enables customers to make informed decisions about their investments. This includes the use of interactive tools, tutorials and accessible investment platforms that demystify complex financial concepts.

Furthermore, the incorporation of ESG elements into investment strategies resonates with new generations that prioritise sustainability and ethical investments. Financial institutions can use technology to offer a wide range of socially responsible investment options and transparent reporting on environmental impact.

Turning our attention to the younger high net worth (HNW) individuals, this segment has grown up or has always lived in the internet age and is used to an immediate, simple and interconnected user experience even when it comes to managing their investments and savings. Moreover, the new generations are more autonomous than their parents and grandparents when it comes to selecting, monitoring and generally managing their investments and rely heavily on digital tools and platforms to do so. For these reasons, it is crucial that for this specific demographic, firms implement systems that guarantee an efficient and effective customer experience, with user-friendly and easy-to-understand interfaces, rich in functionalities that allow for the most detailed customisation possible. Of course, it is essential not to forget the issue of data security and reliability, an aspect to which the new generations are particularly sensitive.

TWM: If we look more specifically at how AI can benefit advisers, and how advisers are actually leveraging AI based technology, can you share some examples of where AI is being used, and what impact this is having?

Dr. Alexander Cassar: AI and process automation simplify the work of the adviser, but it also impacts the relationship between firm and adviser.

The integration of artificial intelligence and process automation in wealth management undoubtedly simplifies advisers’ workflow, allowing them to focus more on strategic interactions with clients rather than on administrative tasks. This transformation changes as well the dynamics of the relationship between banks and advisers in several ways.

By automating routine processes, advisers have more time to interact with clients, fostering stronger, more personalised and meaningful relationships. This shift helps to increase customer satisfaction and loyalty, benefiting both the institution and the adviser.

Analyses based on artificial intelligence components can provide advisers with a deeper understanding of customers’ needs and preferences, enabling them to offer tailored solutions and proactive advice. This not only improves the adviser’s value proposition, but also strengthens the bank’s position as a trusted financial partner offering superior financial services.

Finally, the integration of AI components into the technological tools available to advisers increases the efficiency and accuracy of decision-making, leading to better investment and risk management results.

TWM: At an overall level, how does / can AI positively impact the Client Experience (CX)?

Dr. Alexander Cassar: An initial and important indication of what technology can offer when it comes to CX is in the personalisation of services. Artificial intelligence (AI) and data analysis allow financial institutions to acquire and analyse a large volume of data on their clients, such as those relating to financial transactions, investment and savings objectives and risk appetite, by processing client clusters based on models and associating each client with its respective segment. Thanks to this, banks and advisers will be able to develop and propose ad hoc solutions designed for the specific customer or cluster, usable through a user experience built with the same degree of customisation. That’s not all: the use of AI-based virtual assistants and chatbots could make it possible to assist customers and answer their questions at any time and in real time, ensuring fluid, dynamic and personalised communication between institution and customer, which strengthens the relationship over time. It is also important to stress that the digitisation of wealth management does not only affect the user experience. Indeed, technologies such as AI make it possible to automate many of the operational processes of banks and other institutions: this, in turn, reduces the time required to perform tasks such as data acquisition and analysis and their reporting, as well as those related to compliance obligations. In other words, more time and resources that wealth managers can devote to their clients.

TWM: How do you see the evolution of technology in Wealth Management? What does the future look like, beyond just AI?

Dr. Alexander Cassar: As outlined above, technology can never replace the human relationship between adviser and client. However, while it is true that the new generations of HNW tend to deal more frequently with their advisers than their predecessors, it is also true that they are much more demanding with respect to service quality. And since technology is now a fundamental component of our lives, both advisers and financial institutions will have to invest in ensuring that their skills and services are fully complementary and in sync with the technological tools used by their clients.

In our innovation projects, we apply a combination of technologies that include artificial intelligence components. To give a few examples, we use machine learning solutions for portfolio and risk optimisation in various portfolio management processes.

Using deep learning technologies, we can manage unstructured data in various types of documents and communications, classifying them in an automated way and using hyper-automation solutions to ensure investment compliance. These solutions accelerate the correct application of investment rules to client orders and create the correct pre- and post-trade instructions for straight-through processing.

Through the specific training of LLM (Large Language Models), we are working on solutions that can solve problems that occur during client onboarding, facilitating client acquisition and conversion, fact-finding, financial planning and suitability, and on the introduction of virtual assistance solutions to provide guidance and information resources to determine the next best action for advisers conducting reviews of their clients’ situations. We also seek to integrate artificial intelligence into different types of activities, both internal and for end-clients, in order to improve the quality and timing of service delivery.

TWM: In summary – do you see AI as an opportunity, or as more of a risk to the industry?

Dr. Alexander Cassar: We believe that the industry is well prepared to integrate AI applications due to various factors – in particular from the industry’s characteristics, such as ongoing digitalisation initiatives, their complex and siloed existing IT systems, a large customer service workforce and a strict regulatory environment. Thus, the use of AI tools has the potential to increase customer satisfaction, improve decision-making and employee experience, and minimise the risk of fraud and compliance infringement through better monitoring.

In the coming months and years, proactive adoption and strategic management can position organisations to leverage generative (and other forms of) AI as a catalyst for sustainable growth and competitive advantage.

Looking ahead, the evolving role of AI in organisations will increasingly see AI Copilots that work side-by-side with employees and AI Agents being assigned specific instructions to execute tasks and perform controls. Embracing AI promises to redefine the boundaries of innovation and efficiency in the financial services sector by transforming the organisation’s knowledge into an abundance of intelligence and announces a new era of human-machine collaboration that will shape the future of work.