Janifha Evangeline | Friday, 20 August 2021, 07:19 IST
Amazon.com Inc. has made its first investment in the country’s wealth management landscape, The company has participated in a USD 40 million round by Smallcase Technologies Pvt – which is a fintech startup. Smallcase Technologies based out of Bengaluru stated the round was led by Faering Capital Pvt and joined by PremjiInvest, which is the private investment office of Mr. Azim Premji – the Indian business tycoon.
The way technology has advanced and made progress in recent years, is extremely impressive. This has paved the way to innovative solutions which have completely transformed the way several industries function. One such industry that has adapted to and evolved with futuristic technological solutions is the wealth management industry. Gone are the days when wealth managers & financial advisors used to spend long hours working and pointing over spreadsheets and formulas to perform numerous calculations and analysis, but today with the advent and implementation of AI in the wealth management industry, the traditional methods of wealth management has become almost redundant.
This advancement or development in the wealth management industry, and also the whole financial sector now promises easier solutions to complex fiscal problems. As an investor, one should gain access to an environment, which allows them to leverage the advanced technologies for managing their wealth more effectively.
Investment and portfolio advisory services
The integration of technology into wealth management delves deeper as Wealth Management experts are implementing AI on a huge scale to not only help advise but also manage the investments of their clients. Automation of these central and essential services enables the wealth management sector to render clients with a customized service experience, which is driven by AI.
All the back-end processes that are a part of the investment and portfolio advisory and management are being handled by AI, the results obtained are not only highly objective but also unbiased and thus this brings higher levels of the discipline into the wealth creation and management process, which helps you enjoy higher returns without actually being weighed down by human bias. Furthermore, the implementation of advanced technologies has led to the rapid evolution of wealth management, as everything right from suggesting the right stocks, to tracking and also monitoring the client’s investment portfolio has been improved by automation.
Predictive analysis implementing algorithms
Before technology overtook or refurbished the wealth management sector, most portfolio advisors as well as wealth managers in order to predict the stock movements they had to manually track the performance of equity stocks, and this comprised sifting through humongous historical price data, charting of the present price movements and implementing numerous formulas that would help to calculate and assess technical indicators.
However, recent technological advancements have transformed the way experts assist clients to manage their wealth. In the present scenario, wealth management leverages programmed algorithms as well as specialized tools to enable the predicting of the price movement of stocks, while AI has remarkably surged the price predictions accuracy and enhance the ability to easily recognize entry and exit points. Also, Wealth managers are leveraging and implementing algorithmic predictive analysis in order to determine the financial and non-financial assets which will facilitate one to achieve their financial as well as personal life goals.
Back-testing of strategies
Back-testing of strategies is another remarkable instance of how wealth management has evolved to leverage technology to its advantage. Earlier, though wealth managers & advisory experts were able to manually devise wealth creation strategies, it was not possible for them to test these strategies in the real world or in real-time. Hence, such strategies and their impact were not completely analyzed/predicted till these strategies were implemented in reality and this effectively made many solutions either erratic and often putting clients’ investments at risk, unfortunately.
Also, with the evolution of wealth management, both financial, as well as wealth creation strategies, can be tested completely under the present market conditions and environments as well and this ability to back-test financial plans as well as strategies has enabled to surge the decision accuracies that are decided by wealth managers, and at the same time decreasing the risk factor.
Implementing AI in customer service
Without technological support, wealth management service providers will find it too difficult and daunting to attend to the needs of their clients 24/7, which can finally result in draining of resources, thereby affecting the quality of service provided to customers and this is where AI and ML have facilitated in bringing about the evolution of wealth management.
In today’s market, a large number of service providers are offering chatbots that are powered by AI to help handle customers’ queries. While AI facilitates decreasing the strain on the experts in the wealth management sector by directing only important and high-priority queries and demands over to the respective personnel, with ML, AI can also capture and learn from the customer interaction over time.
The Future of India’s Financial Wealth
According to a recent report by BCG, India’s financial wealth is anticipated to grow by 10 percent per annum to USD 5.5 trillion by 2025. In accordance with the emerging economic recovery of the country, the report shows that growth in prosperity and wealth remarkably via the crisis and is probably to expand in the next 5 years to come and the country is anticipated to lead percentage growth of fortunes worth USD 100 Mn in 2025.
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