Wealth managers see huge potential in GenAI though yet to put it into practice

GenAI has the potential to free up relationship managers’ time though few firms have clearly set out how they might incorporate the technology into their business models

GenAI – artificial intelligence which can generate data including vldeos, text and images – is set to transform wealth management according to a new report, though most industry players lack a coherent, long-term strategy.

Early pilots show that using GenAI can significantly raise client conversion rates. In the long run, it could increase conversion rates by up to 100 per cent, according to Boston Consulting Group’s (BCG) Global Wealth Report 2024: The GenAI Era Unfolds.

While 86 per cent of those financial institution executives, including wealth managers, believe GenAI will prove highly disruptive and/or transformational, 82 per cent admit lacking both an overarching, longer-term GenAI strategy and short-term implementation roadmaps.

“I think it’s going to be transformative,” says Dean Frankle, London-based managing director and partner at BCG. “But how many wealth managers have a clear, long-term strategy for how they're going to do that?”

Numbers of pioneers are small. But once adopted, GenAI can bring client interactions to a higher level, while reducing costs and unlocking productivity across the board.

“It frees up a lot of relationship managers’ capacity to really focus on things that matter,” he says. “It drives a greater client experience because you're leveraging all the possible information that's available to somebody.”

Time saver

GenAI could potentially save frontline time by up to 30 per cent, according to BCG, with this number set to increase, as GenAI applications become more prevalent.

In addition, these applications can reduce time that relationship managers spend preparing documents such as requests for proposal (RFPs) and client pitches by up to 50 per cent.

Wealth managers are also using GenAI to monitor transactions and screen clients. European institutions report that its application led to a 40 per cent reduction in ‘false positives’, saving a relationship manager’s time.

Wealth recovery

Global net worth recovered in 2023, growing by 4.3 per cent, after a turbulent year in 2022, according to the report. North America and western Europe experienced particularly strong gains, while China's growth remained more modest.

Cross-border wealth increased 5.1 per cent in 2023, reaching $13tn. Switzerland remains the largest booking centre globally, growing at its historical average of 4.8 per cent. The country is projected to maintain its lead, capturing 15 per to 20 per cent of new global cross-border wealth through 2028.

Zurich and Geneva, however, face stiff competition from rival centres in Singapore, the UAE, and US, which are growing at a faster pace. “On UAE, given the rise of the domestic markets, you will also see a rise in cross-border rates in those institutions,” believes BCG’s Mr Frankle.