Three senior market executives shed a light on ‘bionic advisory’ in wealth management to build deeper client relationships through artificial intelligence (AI) and technology.
Bionic, according to the Webster Dictionary, is defined as having normal biological capabilities or performance enhanced by electronic or electromechanical devices.
The idea has evolved from its original application via robo advisors a decade ago, where machines were supposed to make all the decisions. “Here we're really talking about using technology, AI, data to enhance the decision making of wealth advisors,” Eric Michl, head of global markets, Asia at BBVA kicked off discussion as the moderator.
AI won't replace bankers, but bankers who know how to use AI will replace bankers who don’t - Adam Cowperthwaite, Citi Global Wealth
Adam Cowperthwaite (pictured), managing director, head of markets, Apac at Citi Global Wealth, stressed the transformational impact of ‘bionic advisory’ in wealth management.
According to Cowperwaite, ‘bionic advisory’ represents the whole concept of augmenting the performance of a human advisor with technology in order to get over “the enormous difficulty” that issuers present advisors with in managing portfolios for individuals, when those portfolios become very complex.
Asian advisors are generally familiar with automation of pricing and execution which has made transacting structured products and delivering a customised trade much more efficient making the life cycle management of products simpler.
“The negative side is that it tends to push advisors towards doing a narrower set of products,” said Cowperthwaite who covers high-net-worth (HNW) and ultra HNW clients at the US bank in hope of utilising AI to offset the limitation.
“AI won't replace bankers, but bankers who know how to use AI will replace bankers who don’t,” he said, citing a comment from a senior banker.
Left to right: Eric Michl, BBVA (moderator); Tuohua Wu, Bachelier Information Technology; Adam Cowperthwaite, Citi Global Wealth; and Heiko Steinmetz, LPA
The Asian market has been advanced in automation for pricing and request for quotes (RFQs) compared to the US and Europe, dating back 10 years ago before the invention of ChatGPT, said Tuohua Wu, partner at Bachelier Information Technology, a Chinese risk analytics company.
The former exotic option trader expects to see financial institutions leveraging all kinds of data to “better understand the macro themes as well as product trends and know [their] client better”, such as adopting clients’ preference to their asset allocation.
Building blocks
It is crucial that the data for AI is properly cleaned up and usable as the amount is often not homogeneous or difficult to gather, according to Heiko Steinmetz, advisor structured products at LPA, a German regulation technology provider.
“In parallel to implementing AI solutions, there needs to be a number of plumbing in place at banks or with data architecture, focusing on data quality management, data dictionaries and data process,” said Steinmetz.
Otherwise, the use of AI is going to be limited in small or isolated applications, as opposed to the whole firm.
Wealth cockpit is a favoured tool for Steinmetz for its integration of various applications across an entire wealth organisation with additional AI tools that help to manage portfolios and save laborious work.
“If you look at an entire portfolio of structured products, there will be optimal points for each of those products to either run or unwind you,” he said. “If we can use valuation, which is the same as pricing, I'm just pulling a leg in order to give that advice on an overall portfolio, we can significantly improve the outcome for the client.”
The approach is expected to enhance advisor’s competitiveness, added Steinmetz.
Left to right: Eric Michl, BBVA (moderator); Tuohua Wu, Bachelier Information Technology; Adam Cowperthwaite, Citi Global Wealth; and Heiko Steinmetz, LPA
“I think the most important part is that be open minded, so embrace AI and big data facilitate the process that can take advantage of all the tools and data to better serve your clients,” said Wu at Bachelier Information Technology.
Do you have a confidential story, tip, or comment you’d like to share? Write to summer.wang@derivia.com