Despite the growing size of the global investment management industry, recent findings highlight the continued elusive nature of revenue growth and profit margin expansion.
However, the potential for artificial intelligence (AI) to drive revenue growth is becoming increasingly evident.
A new investment management perspective from Deloitte showed that while integrating AI to improve process efficiencies may be common across the industry, examining how these capabilities can be deployed to boost sales and distribution is expected to gain traction next year.
According to Deloitte, some investment managers are already jumping on this opportunity, including Amundi, Wealthfront and Vanguard developing internal AI-powered tools to support personalized portfolio recommendations based on clients’ specific risk tolerances.
“These AI-powered tools are designed to analyze data from client interactions to gain real-time insights at the macro and micro levels of investment managers’ clientele,” the company wrote.
“With this level of detail on their clients’ current needs, sales teams can tailor specific fund recommendations more effectively. »
Meanwhile, other companies are beginning to use generative AI to develop personalized marketing strategies for existing and potential customers.
This is despite an increase in use cases.
However, Deloitte estimates that in 2025, the use of AI in distribution initiatives is expected to grow to “modest” and “significant” degrees, as the potential revenue growth benefits become clearer for the investment management industry.
Promise of industry disruption exceeds expectations
This year, Deloitte noted, AI technologies are seen as a potential disruptive force in the investment management industry.
“Now it appears that this promise has exceeded expectations,” the company said.
At the same time, businesses now face the hurdle of leveraging AI solutions at scale without prior models to guide them.
It is therefore becoming increasingly essential that investment managers be vigilant when integrating such technologies, according to Deloitte.
“Those who are slow to realize efficiency or identify ways to drive innovation may struggle to remain competitive in 2025, as efficiency in investment management operations is not only a factor in improving margin, but could also have the potential to generate alpha,” the report said.
“Considerable transformations are still on the horizon. »
