How investment firms are evolving with AI and tech innovations for the next generation

How investment firms are evolving with AI and tech innovations for the next generation

A groundbreaking study, involving wealth management experts from ThoughtLab, Deloitte, and FNZ, and supported by Amazon Web Services (AWS) and Genesys, has unveiled that the landscape of the investment industry is set for a dramatic transformation by 2028.

The consensus among senior executives globally is that a blend of digital innovation and artificial intelligence (AI) will be pivotal for success in the forthcoming era. This shift is largely attributed to changing technological, regulatory, competitive, demographic, and economic landscapes, which are expected to redefine investor expectations and consequently, reshape the industry.

Notably, a significant percentage of executives, 55%, predict that born-digital firms will play a transformative role in the wealth industry. Additionally, 52% of firms at the forefront of digital transformation foresee a considerable shakeout within the industry.

The anticipated impact of AI is substantial, with 69% of executives believing it will fundamentally alter operational methodologies. Furthermore, nearly half of the respondents envisage blockchain and similar technologies diminishing the role of intermediaries such as custodians and clearinghouses.

A major insight from the study highlights the commoditization of most products, urging providers to introduce value-added services to maintain their fee structures. Moreover, an evolving demand for more integrated financial solutions is blurring the lines between wealth management, banking, and insurance sectors.

The global study also emphasizes the urgency of accelerating digital and process transformation to cater to the evolving preferences of Generations X, Y, and Z, particularly as these cohorts gain influence and as wealth expands into emerging markets. A majority of investors, including a substantial proportion of younger generations, express a desire for investment providers to offer digital experiences akin to those provided by leading tech companies. Furthermore, the demand for enhanced digital tools to enable investors to manage their portfolios directly is on the rise.

In response to these evolving demands, investment providers are prioritizing technology as a core competency, with a significant number already midway or advanced in the implementation of modernized, cloud-based platforms. These platforms facilitate the digitization and automation of operations, driving cost efficiencies, fostering innovative business models, and unlocking new revenue opportunities.

Louis Celi, CEO of ThoughtLab and director of the study, emphasizes the importance of understanding future investor expectations and behaviors to thrive in the upcoming investment era. He said, “To thrive in the next era of investment, industry executives need a clear view of the future expectations and behaviors of worldwide investors and what providers plan to do to keep them happy. Our research shows how firms need to rethink their products, services, processes, business models, and digital strategies to become future ready.”

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