tTTTTTTTTTTTTTTT Arthy Baheerathan , Author at Industrial Thought Group

 

We firmly believe that strategic collaboration is essential for any industry to transform.  As we navigate the path to wealth management 4.0, financial services firms should focus on striking up suitable partnerships to develop their products and services in line with changing needs. Those who ignore the need for collaboration will likely be left behind. This is a topic our Group CEO Nuno Godinho discussed in a recent article for Maddyness, exploring the lessons we can learn from the digital transition in other industries such as healthcare.

At Industrial Thought, we’re committed to fast-tracking the future of wealth management through our investment arm Thought Ventures. We invest in disruptive innovators, some in our realm and others in adjacent markets, all aligning with our values and reinforcing our commitment to creating a socially responsible, sustainable circular economy. Additionally, we are exploring potential acquisitions to keep growing as a group.

 

Some of our recent investments include:

 

1. Sourcing Playground

Sourcing Playground exists to remove uncertainty around the supply chain. It is an innovative intelligence platform that provides brands and retailers with global production insights, industry data and analysis, so they can build strong sourcing strategies and trade with ethically-minded partners. Companies don’t need to spend the time and money visiting factories themselves as the platform presents a comprehensive view of all the relevant information.

For asset management firms and equity researchers, Sourcing Playground lets them assess the ESG track record of factories supplying the major retailers that their clients may wish to invest in. As a result, investment firms can differentiate their service by delivering deeper insights about a company’s ESG credentials from an entire supply chain perspective and personalise investment strategies. 

 

2. Ammonite

Ammonite builds financial adviser software for pure online engagement, resulting in a broader customer reach, enhanced conversion, and greater operational efficiency. It is evolving the financial planning experience through digital technology and empowering financial advisers with the tools to engage and economically service the next generation of investors. Confident in the power of partnerships, Ammonite understands that this era of digital disruption requires advisers and software providers to work together for everyone’s benefit. 

When Nuno spoke with WealthBriefing, he emphasised the importance of building a digital ecosystem in wealth management; this starts with a digital front door that connects all of the investor’s data in one place. Maintaining a customer-centric perspective is only possible when we have a consolidated view of data, leveraging technologies like AI and Machine Learning. Now is the time to put customer experience first and Ammonite is focused on that goal. 

 

3. TURN

The TISA Universal Reporting Network (TURN) is an industry blockchain solution for collecting and disseminating fund-related data. The overall aim is to increase market compliance, reduce regulatory and operational costs, and provide a better service to investors. Essentially, it acts as a central data repository for the asset management industry – an irrefutable ledger that all parties can see and rely on.

Again, as we work towards an open marketplace in wealth management, having a standardised reporting network for shared data is critical to establish provenance and traceability, and protect against liability. We can only build a more sustainable, circular financial future if it’s built on trust.

 

4. Finbridge Global

Finbridge Global is a collaboration platform that has been designed to facilitate faster, more effective partnerships between fintechs and financial institutions. It is the only global platform with a smart assessment engine that can define a fintech’s suitability for FIs, aiding the creation of powerful partnerships. The platform offers a straightforward way of accessing an extensive array of fintech solutions in one space and includes an in-depth evaluation, expediting the Request for Information (RFI) process. It also identifies strengths and weaknesses; where weaknesses emerge, fintechs are provided with a clear path to improvement.

While many FIs see the benefit of collaborating with fintechs, it’s not always easy for them to access the right information. Finbridge Global simplifies that process, allowing organisations to pinpoint providers that align with their preferences and requirements, moving valuable relationships along quicker.

 

All of these investments reflect our commitment to investing with purpose, fast-tracking innovation for transparency, and driving digital transformation and connection. It’s challenging for fintechs to attract investment in the current market, but at Industrial Thought, our sights remain firmly fixed on finding opportunities to advance our industry. If you would like to discuss potential collaborations, reach out to us here.

 

London, England, 19 January 2024: Industrial Thought Ltd. – a group of companies focused on accelerating the future of wealth management – has announced a £500,000 investment in the collaboration platform Finbridge Global with £150,000 cash, plus £350,000 worth of strategic support. 

According to 2023 statistics from Deloitte, there are currently around 30,000 fintech startups worldwide with a global market value of approximately £252 billion. The UK fintech market is valued at £15.9 billion. However, despite the significant opportunities this represents for startups, investors, and financial institutions (FIs), it’s challenging to search and compare fintechs based on their capabilities, limiting the number of potential collaborations.

Finbridge Global has been created to bridge this gap. It is the only global platform with a smart assessment engine that can define a fintech’s suitability for FIs, aiding the creation of powerful partnerships. The platform offers a straightforward way of accessing an extensive array of fintech solutions in one space and includes an in-depth evaluation, expediting the Request for Information (RFI) process. It also identifies strengths and weaknesses; where weaknesses emerge, fintechs are provided with a clear path to improvement.

Barbara Gottardi, CEO and Founder of Finbridge Global, explained: “FIs recognise that they can reap major benefits from technology innovators in areas such as operational efficiency and better consumer outcomes. Yet, while most of these organisations are keen to engage fintechs, they struggle to get the information they need to establish trust. Our goal is to simplify the process, promote transparency, and ultimately facilitate progress.

“Working with the right partners is key to achieving positive outcomes, which also applies to our own growth as a technology startup. The investment from Industrial Thought allows us to cement our positioning, build strategic partnerships, and encourage adoption in the UK, before expanding the platform’s global footprint in 2024. We’re incredibly pleased to work with the team and leverage their expertise.”

Nuno Godinho, Group CEO of Industrial Thought Ltd., added: “Finbridge Global’s commitment to collaboration reflects our firm belief in the power of partnerships to fast-track the future of financial services. The technology behind the platform stands out for its comprehensive capabilities and streamlined approach, and the standardised assessment criteria is a crucial element to build trust. 

“As part of our strategic investment approach, we don’t just look at the financial value we can offer, but also the benefits we can add through the support of our shared services and sales channel. We look forward to helping Barbara and her team maximise the platform’s impact in the UK and beyond.”

Finbridge Global hosts a monthly Innovation Board in collaboration with The Investing and Saving Alliance (TISA) to ensure its platform is fully-equipped to meet the sector’s needs. The Innovation Board brings together diverse financial institutions to discuss the changing nature of fintech engagement. 

Innovation Board Member John Thompson, from the global investment company ABRDN said: “We are pleased to be collaborating with Finbridge Global in tackling some of the industry’s biggest tech innovation challenges. To succeed in an API-led world, FIs must employ increasingly efficient fail fast methods for identifying and evaluating the potential and interoperability of new technologies. Having an effective “match-making” platform will speed up these assessments and make a big difference for further innovation.” 

 

About Industrial Thought Ltd.

Founded in 2013, Industrial Thought Ltd. is the parent company for a group of companies shaping the future of financial technology and data products. Backed by collective expertise, it is powering the transition to wealth management 4.0 and facilitating a socially responsible, sustainable economy. 

As the wealth management industry enters a new era, Industrial Thought will drive transformation by creating a complete suite of data, platform, and marketplace services to support the delivery of higher standards and speed up innovation.

Companies within Industrial Thought include: 

  • FSL (Financial Software Ltd.): Simplifying the Complexity of Managing Investment Taxes. A provider of specialist investment tax solutions and the creator of CGiX, the market-leading capital gains calculator. 
  • Raw Knowledge: Reshaping Wealth by Demystifying Data. A specialist data provider for the wealth management industry. 
  • Thought Train: Fast-tracking the Digital Leap in Wealth Management. A rapid proof of concept company focused on financial software development. 
  • Thought Ventures: Investing in Trailblazers to Build a Sustainable Circular Economy. A venture builder and incubator aimed at investing in innovative early-stage to Series A start-ups working towards a more circular economy. 

 

London, England, 10:30, 8 December 2023: Industrial Thought Ltd. – a group of companies focused on accelerating the future of wealth management – has announced a £250K investment in the pioneering platform TURN (TISA Universal Reporting Network). Developed by The Investing and Saving Alliance (TISA), TURN is an industry blockchain solution for collecting and disseminating fund-related data. The platform represents a major milestone in empowering asset managers, distributors, and the broader financial sector by providing a unified, transparent, and efficient solution for data-related challenges. The aim is to increase market compliance, reduce regulatory and operational costs, and ultimately provide a better service to investors.

Gary Bond, CEO of TURN, said: “We believe that data is the lifeblood of the modern financial world, and it should be harnessed to its full potential. Unlocking that potential starts by overcoming the main obstacles; because TURN has been developed by industry experts for industry professionals, we can tackle those challenges head on. Building on the platform’s initial success, we have a lot of exciting plans in the pipeline. The investment from Industrial Thought enables us to enhance our capabilities further as we continue to address the evolving needs of our industry.” 

Nuno Godinho, Group CEO of Industrial Thought Ltd., added: “In this new era of digital transformation, it is crucial to standardise data to create trust, limit liability, and allow our industry to thrive. TURN is doing exceptional work building an environment where firms can share their data and its key principles of transparency, collaboration, cost-effective excellence, and quick to market, totally align with our values.”

Industrial Thought is taking a holistic approach, paving the way for an ecosystem that serves both investors and wealth and asset management professionals. This environment relies on having a trusted financial reporting network like TURN at its core so that stakeholders can share data securely and be confident that the information has been validated. 

 

About Industrial Thought Ltd.

 

Founded in 2013, Industrial Thought Ltd. is the parent company for a group of companies shaping the future of financial technology and data products. Backed by collective expertise, it is powering the transition to wealth management 4.0 and facilitating a socially responsible, sustainable economy. 

As the wealth management industry enters a new era, Industrial Thought will drive transformation by creating a complete suite of data, platform, and marketplace services to support the delivery of higher standards and speed up innovation.

Companies within Industrial Thought include: 

  • FSL (Financial Software Ltd.): Simplifying the Complexity of Managing Investment Taxes. A provider of specialist investment tax solutions and the creator of CGiX, the market-leading capital gains calculator. 
  • Raw Knowledge: Reshaping Wealth by Demystifying Data. A specialist data provider for the wealth management industry. 
  • Thought Train: Fast-tracking the Digital Leap in Wealth Management. A rapid proof of concept company focused on financial software development. 
  • Thought Ventures: Investing in Trailblazers to Build a Sustainable Circular Economy. A venture builder and incubator aimed at investing in innovative early-stage to Series A start-ups working towards a more circular economy. 

 

London, England, 07:00, 15 November 2023: Industrial Thought Ltd. – a group of companies focused on accelerating the future of wealth management – has announced a £250K investment in Ammonite, developers of hybrid financial advice technology. This raise comes during a period of significant economic pressures but also a period of rapid transformation for the industry, with financial advisors forced to meet a new wave of digital demands. As a result of the investment, Ammonite can speed up the pace of its development and enable more advisory firms to grow their customer base.

Ammonite builds financial adviser software for pure online engagement, resulting in a broader customer reach, enhanced conversion, and greater operational efficiency. It is evolving the financial planning experience using AI and ML, empowering financial advisers with the tools to engage and economically service a wider market of next-generation investors. Clients can benefit from ready-made solutions or customise their own remote customer and adviser journeys. 

Deloitte’s recent Wealth and Asset Management 4.0 report revealed that 40% of clients now say digital access has greater importance in decision-making. And three-quarters of wealth firms believe that investors’ primary engagement channel will be digital within two years.

Rob Harradine, Co-founder of Ammonite, said: “Today’s investors expect fully remote or hybrid interaction. Having worked as financial advisors, we understand industry and investor frustrations. Leveraging the power of technology, we make it easier for advisors to deliver an efficient service and a superior client experience at scale. Industrial Thought’s strategic investment is an exciting step, given our shared vision to drive digital transformation across the financial services industry.”

Nuno Godinho, Group CEO of Industrial Thought Ltd., added: “We are committed to advancing wealth and asset management, not only by building new products, but also by partnering and investing in innovative companies and entrepreneurs who align with our mission to facilitate a socially responsible, sustainable circular economy. Our industry must put clients/investors first by providing a fully personalised customer experience throughout their journey. This needs to be digital-led, which is why the time is right for us to invest in start-ups spearheading this change like Ammonite. Ammonite brings a unique proposition allowing the industry to create connected wealth journeys for any of the wealth pathways chosen.”

Industrial Thought is taking a holistic approach, paving the way for an ecosystem that serves both investors and wealth and asset management professionals. In this environment, stakeholders can see tailored information, compare options, and select best-in-class products, such as Ammonite’s software, at every stage of the investment journey. Data security and transparency is another crucial component of the ecosystem, and Industrial Thought recently announced its investment in the pioneering platform TURN (TISA Universal Reporting Network), an industry blockchain solution for collecting and disseminating fund-related data.  

 

About Industrial Thought Ltd.

Founded in 2013, Industrial Thought Ltd. is the parent company for a group of companies shaping the future of financial technology and data products. Backed by collective expertise, it is powering the transition to wealth management 4.0 and facilitating a socially responsible, sustainable economy. 

As the wealth management industry enters a new era, Industrial Thought will drive transformation by creating a complete suite of data, platform, and marketplace services to support the delivery of higher standards and speed up innovation.

Companies within Industrial Thought include: 

  • FSL (Financial Software Ltd.): Simplifying the Complexity of Managing Investment Taxes. A provider of specialist investment tax solutions and the creator of CGiX, the market-leading capital gains calculator. 
  • Raw Knowledge: Reshaping Wealth by Demystifying Data. A specialist data provider for the wealth management industry. 
  • Thought Train: Fast-tracking the Digital Leap in Wealth Management. A rapid proof of concept company focused on financial software development. 
  • Thought Ventures: Investing in Trailblazers to Build a Sustainable Circular Economy. A venture builder and incubator aimed at investing in innovative early-stage to Series A start-ups working towards a more circular economy. 

Contact us to learn more about innovative solutions for connected wealth journeys and discover how we’re shaping the future of wealth management.

Like many others, the investment industry is dealing with significant changes driven by digital, social, and economic factors. The pandemic accelerated some of these influences, while others have gradually evolved. One trend shaping our future is online customer interaction. In a business traditionally built on face-to-face contact, Covid proved that it was certainly possible for wealth managers to liaise with clients remotely. Since then, there has been a lot of focus on keeping online communication channels open. This is absolutely vital. However, there is a much broader picture to consider. If firms want to thrive in a new era of wealth management innovation, the sector as a whole must embrace a holistic approach to digitisation.

Investors are calling for personalisation, democratisation, and transparency. And pressure to meet these demands is mounting fast against a backdrop of high interest rates and economic uncertainty. Satisfying expectations requires innovative thinking and the clever use of data to deliver customer-centric experiences tailored to the individual.

Wealth management may have been relatively slow to adopt digital transformation, but we can learn from segments that have advanced faster to facilitate a smoother transition. One is healthcare, where the benefits of digitisation for both clients and industry professionals are clear.

 

Putting Investors In The Driving Seat

Healthcare had to harness digital technology as part of the immediate response to Covid, but the sudden shift also helped to address longer-term dissatisfaction. Even pre-pandemic, care pathways were not cohesive and too little attention was paid to improving the patient experience.

The gap was especially apparent at a time when lifestyle brands were investing heavily in digital tools to deepen connections with customers as they moved seamlessly between channels. With technology being used to create comprehensive journeys and hyper-personalised services in sectors such as retail, patients were becoming frustrated, and health outcomes were being jeopardised.

As innovators from technology, telecom, and consumer industries entered the healthcare market, they recognised that patient portals weren’t doing enough to streamline multiple touchpoints and consolidate massive amounts of data – all of which would help put the patient in control. That’s when the digital front door was developed, engaging patients at each stage using everyday technology. It gave people a gateway to their care that was clear, convenient, and accessible.

Investors want to be in the driving seat of their financial future in a similar way. Wealth management client portals are far from delivering a holistic view of an individual’s financial wellbeing independently of where and what those investments may be. As end-to-end care pathways have emerged, we need a digital front door that allows us to create comprehensive wealth pathways that federate identities, and unifies Know Your Customer (KYC) and Anti-Money Laundering (AML) processes, connecting all of a person’s assets in a single-pane-of-glass solution.

A consolidated view of data also means we can move from focusing on products to concentrating on hyper- personalisation of wealth pathways and customer outcomes. It will allow wealth managers to develop bespoke risk profiles and custom portfolios aligned with investors’ Environmental, Social and Governance (ESG) preferences and structured for their personal values, based on a customised 360-degree picture incorporating different facets of their personal life.

With so much to consider, rapid transformation can be overwhelming, which is why no entity, regardless of their size, should expect to digitise systems and processes alone. Savvy healthcare providers saw that ground-breaking innovation could only come from successful partnerships. Similarly, it’s important for the wealth management firms to keep an open mind and be on the lookout for synergies. Competitors can also be valuable collaborators, and it’s better to move forward in a stronger position together rather than risk losing your place in the market.

 

Making Wellbeing A Strategic Focus Through Technology

Integrating new technologies isn’t only about elevating client experiences; it’s fundamental for employee wellbeing. In healthcare, there is the concept of clinical decision support systems (CDSS). This data-driven software is designed to improve healthcare delivery, supporting clinicians in complex decision-making processes by ensuring they have the right information to improve patient outcomes.

As a result, healthcare practitioners get more time to spend with patients helping them to make informed choices about their care. As these systems became more widespread, they had a significant positive impact by reducing the time it took to properly understand a patient’s needs at a specific stage in the care pathway.

It also helped to improve the overall patient experience by reducing misdiagnosis, side effects and potential drug interactions early, which in turn provided better peace of mind for medical workers. Of course, improvements can still be made, which will happen as technologies and processes evolve.

In wealth and asset management, we have the capability to develop wealth decision support systems, which will provide the same type of benefits as clinical decision support systems. Applications that analyse financial data to provide real-time impacts on a client’s portfolio, show how decisions and recommendations align with investor preferences, and minimise risk will certainly reduce stress and improve work/life balance.

Meanwhile automating repetitive manual tasks, like analysing numerous data points to provide the best investment options, allows client managers to focus more on cultivating customer relationships.

We can also unlock further potential in areas by leveraging the power of technology and generative Artificial Intelligence (AI), enabling us to simplify the personalisation of investments and eliminate cognitive bias from investment decisions. We’re seeing examples of this already with the rise in robo-advisors or using ChatGPT for personalised customer communications – new possibilities are emerging all the time.

When we look at the biggest stress factors, KYC/AML, risk management, impact analysis, rebalancing, tax management, market volatility, and governance are all very high on the list. A digital-first approach will help to alleviate these stressors, resulting in a healthier, more productive environment.

It’s an exciting time for wealth and asset management firms that are willing to leave their comfort zones and integrate digital capabilities to keep pace with change. In an environment where innovation and collaboration are crucial, Industrial Thought Ltd. is committed to working with the industry to develop effective strategies, so companies can stand out from the crowd, deliver superior experiences for investors, and build a legacy of innovation and collaboration that will benefit future generations.

We believe that by working together, we can deliver exceptional experiences for our clients, our industry, and our planet which will pave the way towards a more sustainable, equitable, and prosperous world.

 

First published in the PIMFA Spring Journal 2023 on 22 June 2023.

By Nuno Godinho, Group CEO of Industrial Thought Group

People increasingly ask whether traditional advisory firms and private banks will continue to exist in the wealth and asset management industry. My educated guess is yes. But to survive, they must offer a very different kind of service, focused on demonstrating their value to investors. Much of what wealth managers provide has become commoditised, meaning that they need new ways to elevate their offerings aimed at helping the customer rather than optimising internal systems.

The best avenue to advance the future of innovative wealth management would be to develop an open ecosystem, which acts as a one-stop-shop serving both investors and wealth and asset management industry professionals. This kind of ecosystem or marketplace would allow stakeholders to see tailored information, select the relevant components and compare what’s on offer at every stage of the investment journey. As a result, we could meet everyone’s needs in a transparent, and collaborative environment with personalisation and massive potential for progress.

 

Calls for a new approach to innovative wealth management

Digital transformation is evolving rapidly on the path to wealth management 4.0. This is being driven by several influences, most notably a change in customer requirements. Investors want a 360-degree view of their wealth, encompassing all the various entities they interact with. A lack of integration to date has made this impossible.

Whereas people are used to seamless, interconnected experiences and personalised recommendations in sectors such as retail and healthcare, we haven’t been able to offer that yet in wealth management. This has caused frustration especially amongst Millennial and Gen Z audiences, who already feel excluded by private bankers.

To stay relevant and democratise their products and services, wealth managers need to embrace interoperability and share crucial information rather than sticking to individual data ponds. Combining data ponds into a centralised lake would create a holistic picture that puts the investor, not the wealth manager, in the driving seat.

The wealth manager will always be there to advise, but people want to know exactly what they are buying into, how their chosen firms operate internally, and what return on investment they are getting. That’s also where the need to expose internal insights such as portfolio management, portfolio analysis, portfolio reporting, and risk analysis comes in.

To present a granular view, advisors must understand the investor’s entire experience, not only the small part they play in. By developing an industry-wide digital front door, in other words, a far more sophisticated kind of client portal focused on the investor’s full end-to-end wealth journey, we can connect all data in one place, with easy access points, plus the added value of analysis and trends. Customers can then see what differentiates providers and investments, enabling them to evaluate opportunities and risk on a completely new level.

As a precursor to sharing data, the industry should adopt unified standards for exchanging digital information. These are big steps to take. And, naturally, some providers will be nervous about opening themselves up to scrutiny. However, change is happening whether people like it or not – relinquish control or lose customers altogether.

 

Benefits for all

Developing an open ecosystem won’t only benefit investors. Greater transparency, increased connections, and correlations will make it easier for firms to innovate and identify value-added services. And, with standardised data exchange models already in place, it will be quicker to forge powerful collaborations. For example, if incumbents are interested in creating new digital products, they won’t need to go at it alone. Instead, they will have access to the best fintechs and other partners as part of the ecosystem.

The more shared data we can leverage, the more it would help to measure volatility and add value from a risk perspective. We could predict probable scenarios and show investors the impact on their portfolios. Likewise, we can personalise recommendations more effectively when all available information is connected.

Identifying and onboarding new customers also becomes easier, even with a growing number of self-directed investors. If firms are part of an ecosystem that includes all types of investors, there is a connection from the start. That relationship can then be nurtured when the time is right, depending where an investor is on their journey. It is a warm lead because both parties belong to the ecosystem. Moreover, KYC, the AML checks have already been done, saving time and money.

Historically, the industry has relied on investors doing the running. It was a status symbol to have a wealth manager or private banker, but times have changed and status is being redefined. An investor’s priority now is service quality. They want to understand what differentiates one organisation from the other.

Consequently, firms need to stop waiting for people to come to them and go where the customer is. Being part of something bigger i.e. an industry ecosystem is a natural step, otherwise companies restrict their visibility. We can draw parallels with Apple and Google’s app stores. Eventually, we may see multiple ecosystems and it makes sense to get involved in more than one, to increase the probability of winning business.

To seize opportunities moving forward, collaboration and standardisation are essential.

 

Originally Published on Wealth Briefing on 6 September 2023

By Nuno Godinho, Group CEO of Industrial Thought Group

 

About the author
Nuno Godinho is the Group CEO of Industrial Thought Ltd, the parent company for a group of companies shaping the future of financial technology, data products, and innovative wealth management. Originally from Portugal, Nuno is an international board member, CEO and entrepreneur with more than 25 years in business and digital transformation. In addition to founding technology consultancy Diisruptance, his previous roles have included chief technology officer, chief product officer, and chief digital officer with organisations, such as Microsoft, GE, and SAGE. 

Fast-tracking the future of wealth management innovation is a complex undertaking that Industrial Thought Limited has committed to… and there are a number of factors that will contribute to the success of this goal.

Identifying the best approach, or rather the best multi-prong approach, is crucial in navigating our way through a situation that benefits both investors and companies in the sector.

Our visionary CEO, Nuno Godinho, shares his take on how consumerization, personal relationships, investor values, technology, and more are paramount in achieving this goal.

Check out the full Wealth Whispers podcast episode to understand Industrial Thought Limited’s ambitions to fast-track the future of wealth management innovation: https://wealthwhispers.podbean.com/e/fast-tracking-the-future-of-the-wealth-management-industry/

Next, we’ll be looking at how well-known companies such as Apple are looking to transition into the financial services industry – stay tuned!

In recent years, the advent of AI has sparked both excitement and scrutiny within the Wealth Management industry. The technology’s capabilities, including but certainly not limited to generative AI algorithms like ChatGPT, offer a new dimension to data analysis, market prediction, and portfolio management. However, while it presents a promising avenue for enhancing decision-making and elevating client interaction, AI also carries inherent challenges that demand careful consideration.

 

Benefits of AI in Wealth Management:

In a world where CX is key, AI enables wealth managers to provide personalised advice, improved portfolio performance, real-time insights, and convenient access to information and support. Previously it has been impossible for advisors to deliver hyper-personalisation at scale; now, AI-driven customisation lets them tailor investment strategies and recommendations to their clients’ unique financial goals, risk tolerance, and investment horizon.

AI algorithms can also analyse vast amounts of data to identify trends and opportunities, resulting in potentially higher returns on investments. And, more widespread use of automation will gradually reduce the cost of wealth management services, meaning higher-quality investment advice at a lower price. This is critical as firms fight to stay relevant for modern investors disillusioned by traditional advisory firms and private banks.

Relationship-wise, there are many other advantages. AI-driven data analytics make it easier to gain a deeper understanding of an investor’s needs, preferences, and behaviours, all of which help to build long-term relationships. Through predictive analytics, firms can differentiate their service and proactively identify new investment opportunities, such as emerging market trends or underperforming assets. At the same time, chatbots and virtual assistants facilitate constant communication to answer queries and increase engagement. By strategically integrating AI technology into their operations, firms have the power to optimise top and bottom lines, strengthen client connections and position themselves for long-term growth.

 

Navigating the Ethical and Practical Challenges:

While AI holds remarkable potential, major obstacles must be overcome. With AI’s reliance on large amounts of data, ensuring client data confidentiality, managing consent, and complying with global data protection regulations like GDPR are significant challenges. Another issue is algorithmic bias – as AI learns from data, it may inadvertently perpetuate inequalities or biases present in the training datasets used. Vigilance is necessary to ensure that AI systems don’t amplify these issues. A key concern is the absence of standard governance, leading to a lack of accountability and transparency. Black-box algorithms can make decisions without providing clear explanations for their reasoning, making it difficult for clients and regulators to understand and trust AI-driven outcomes. Overall, the responsibility for AI-generated recommendations remains complex, requiring collaborative efforts to establish robust regulatory frameworks.

 

Striving for Data Integrity and Reliability:

The efficacy of AI-driven solutions hinges on the quality of training dataset they are supplied with and rely upon. Therefore, ensuring accurate, unbiased, and comprehensive datasets is paramount to generating trustworthy insights. The absence of standardised data sharing can lead to skewed results, ultimately impacting the quality of AI-generated advice. Transparency in data usage, validation, and generation reasoning will be pivotal to cultivating client trust and minimising systemic risks, which ties back to the absence of standard governance, as the output from AI-generated advice will only be as good as the data sets provided. We need to understand the “lineage” of all data used and generated by the algorithms. Until the industry can come to some accord on how we plan to use all of our respective data, it will be prone to various biases and fragmented advice, which will lead to liability and reliability issues down the line. It’s worthwhile wondering whether we can see the industry opening up in an age of data equals value.

 

The Role of Collaborative Partnerships:

Amidst these challenges, collaborative partnerships emerge as a potent avenue. Established wealth management firms can harness the expertise of FinTech AI companies to augment their capabilities while mitigating the risks associated with AI adoption. A symbiotic relationship, where innovative AI solutions are developed by trusted partners, helps safeguard against potential pitfalls and aligns with the pursuit of ethical, data-driven decision-making.

 

Looking Ahead: Striking a Balance for Sustainable Progress:

As we journey into the AI-powered future of wealth management, it’s evident that a balanced approach is essential. The integration of AI has the potential to expedite the transition to wealth management 4.0, revolutionising personalised client experiences and advisory services. However, this progress must be underpinned by clear ethical guidelines, data integrity, and collaborative partnerships. Striking this equilibrium promises not only a more informed, efficient, and personalised industry but also one that upholds the principles of transparency, accountability, and client trust.

 

In conclusion, AI’s impact on the wealth and asset management landscape is profound, offering unparalleled insights and opportunities. While navigating challenges will be crucial, a collective effort to harness AI’s power while ensuring its responsible application will pave the way for a resilient, future-forward industry.

 

Originally Published on Finance Derivative on 26 September 2023

By Nuno Godinho, Group CEO of Industrial Thought Group

Our purpose at Industrial Thought is to unleash the full potential of a socially responsible, sustainable circular economy by managing and investing in the world’s most innovative businesses. We spearhead innovation in areas like data, scenario planning, proof of concept development and ESG. And while the group was founded in 2013, our story starts much earlier in 1994 with FSL (Financial Software Ltd). For many years, FSL took centre stage as the market leader and first choice for specialist investment tax solutions among the financial community’s most established companies.

Now, with the group’s collective expertise, we are facilitating a rapid transition to wealth management 4.0. This means becoming a strategic partner for the fintech industry by empowering stakeholders with cutting-edge products and insights that reduce risk, enhance their capabilities, and support their digital transition. We believe strongly in the power of collaboration to develop innovative wealth solutions and services for tomorrow’s world.

In addition to FSL, here’s what you need to know about our other group companies:

  • Raw Knowledge is a specialist data provider for the wealth management industry. It provides the largest and highest quality securities and corporate actions database, offering tailored support for offshore fund reporting.
  • Thought Train was introduced as a quick prototyping and minimum viable product generator.
  • Established just this year, Thought Ventures invests in trailblazers not limited to financial services. It uses data, products and learnings from adjacent markets to accelerate the digital leap required in financial services.

Nuno Godinho, Group CEO of Industrial Thought Ltd. said: “we want to fast-track adjacent and disruptive innovation to create a transparent and connected customer experience that meets the individual needs of investors. We are in a prime position to achieve this because we’re fortunate to have a deep knowledge of the industry as a whole. We also have a strong understanding of the macro-level impacts, trends, threats and opportunities. This is an exciting time for us. As financial services moves towards the next stage of its evolution, driven by digital transformation, personalisation, sustainability, and impact investing, Industrial Thought is committed to leading the charge.”

If you are interested in discovering more about Industrial Thought’s innovative wealth solutions, or any of the companies within our group, we would love to share more details with you. Get in touch.

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