Generative AI in asset and wealth management: The art of possible

From reviewing the daily news and trading activities to recommending real-time portfolio adjustments, generative AI (GenAI) is poised to revolutionize the way asset and wealth managers operate. KPMG has surveyed executives on their intention to adopt generative AI and found 50 percent of global business executives are likely to allocate budgets for GenAI within the next six to twelve months, accelerating its adoption. Fintechs are no exception.

Asset and wealth managers have identified four broad areas where GenAI could have the greatest impact, including:

• Synthesizing data for forecasting and portfolio optimization
• Monitoring changes to address cybersecurity and risk management concerns
• Providing decision support to offer personalized financial advice and sales suggestions, and
• Generating content, e.g., client communications and compliance reports.

While investment firms are ramping up GenAI implementation to automate and streamline their processes, they also have concerns about its risks and challenges. Key barriers include weak data foundations, data privacy threats, legality of GenAI outputs, lack of skilled talent, and risks surrounding the cost of investment.

To mitigate these risks without delaying implementation, asset and wealth management companies need to adopt a multidisciplinary approach. Representatives from risk, legal, compliance, IT, and cybersecurity need to be part of this initiative to enable proper oversight and planning. Leaders can start by building a rigorous framework for use case selection and adoption—informed by businesses’ risk appetite and cultural readiness—while enabling a safe ecosystem for their employees to experiment and innovate.