g-f(2)2389 Embracing AI: The Transformative Path to Success in Asset Management

 

genioux Fact post by Fernando Machuca and Claude

Introduction:

The Boston Consulting Group's report "AI and the Next Wave of Transformation" explores the transformative potential of artificial intelligence (AI) in the asset management industry. Despite the industry's rebound in 2023, asset managers face persistent challenges, such as increased investor preference for passive funds, fee compression, rising costs, and a decline in the success of new products. To maintain growth and profitability, the report recommends a three-pronged approach: increasing productivity, enhancing personalization, and expanding into private markets. The successful implementation of AI is crucial to accelerating these strategies and unlocking the full potential of asset management firms.

genioux GK Nugget:

"AI is poised to transform the asset management industry by enabling firms to increase productivity, personalize services, and expand into private markets, ultimately leading to enhanced growth and profitability in the face of persistent challenges."— Fernando Machuca and Claude, May 15, 2024

genioux Foundational Fact:

Asset managers can achieve significant efficiency gains across their value chain by leveraging AI. AI tools can support various functions, including sales and marketing, investment management and trade execution, operations, IT, risk and compliance, and business management. By automating repetitive tasks, synthesizing data for enhanced decision-making, and enabling personalization at scale, AI can help asset managers improve productivity, customer experience, and investment outcomes.

The 10 most relevant genioux Facts:

1. The global asset management industry's assets rose to nearly $120 trillion in 2023, but the industry faces challenges such as investor preference for passive funds, fee compression, rising costs, and a decline in the success of new products.
2. Asset managers can increase productivity, personalize customer engagement, and expand into private markets (the three Ps) to maintain growth and profitability.
3. AI can boost productivity by enabling improved decision-making and operational efficiencies across the asset management value chain.
4. AI can be leveraged to create and manage personalized portfolios at scale and tailor the customer experience from acquisition through retention.
5. AI can enhance the efficiency of private market deal teams and boost their ability to drive value creation in portfolio companies.
6. 72% of surveyed asset managers think AI will have a significant or transformative impact on their organization within the next 3-5 years.
7. 66% of surveyed asset managers have made AI a strategic priority for their business.
8. 88% of surveyed asset managers are actively assessing the feasibility of AI use cases and experimenting with at least one use case.
9. Asset managers need to invest in key enablers, such as people, technology and partnerships, and risk and compliance structures, to successfully implement AI.
10. Asset managers must deploy AI for immediate impact, reshape their organizations with a strategic vision, and invent for long-term advantage to fully harness the transformative potential of AI.

Conclusion:

The era of AI in asset management has arrived, and firms must embrace this transformative technology to overcome the industry's persistent challenges and secure a competitive advantage. By strategically implementing AI to increase productivity, personalize services, and expand into private markets, asset managers can position themselves for success in the face of evolving investor preferences and market conditions. However, the journey requires a strong commitment to developing key enablers, such as talent, technology, and risk management frameworks. Asset managers that proactively invest in AI and integrate it into their operations will be best positioned to lead the industry's transformation and thrive in the years ahead.

REFERENCES

The g-f GK Context

Dean Frankle, Alex Belyakov, Johannes Burkhardt, Joe Carrubba, Peter Czerepak, Lorraine Felix, Paul Hutchinson, Bingbing Liu, Maitreyee Malpekar, Michele Millosevich, Kedra Newsom Reeves, Edoardo Palmisani, Ian Pancham, Neil Pardasani, Ella Rabener, George Rudolph, Lior Valitsky, Andrea Walbaum, and Ivana Zupa, AI and the Next Wave of Transformation, Global Asset Management Report 2024, The Boston Consulting Group, BCG, May 6, 2024.

Classical Summary:

The Boston Consulting Group's report "AI and the Next Wave of Transformation" delves into the transformative potential of artificial intelligence (AI) in the asset management industry. Despite the industry's rebound in 2023, with global assets under management (AuM) rising to nearly $120 trillion, asset managers continue to face persistent challenges. These include increased investor preference for passive funds, fee compression, rising costs, and a decline in the success of new products.

To maintain growth and profitability in the face of these pressures, the report recommends a three-pronged approach, dubbed the "three Ps": increasing productivity, enhancing personalization, and expanding into private markets. The successful implementation of AI is crucial to accelerating these strategies and unlocking the full potential of asset management firms.

AI can boost productivity by enabling improved decision-making and operational efficiencies across the asset management value chain. It can be leveraged to create and manage personalized portfolios at scale and tailor the customer experience from acquisition through retention. Additionally, AI can enhance the efficiency of private market deal teams and boost their ability to drive value creation in portfolio companies.

The report also highlights the current state of AI adoption in the asset management industry, based on a survey of 57 asset managers collectively managing more than $15 trillion in AuM. The survey reveals that 72% of respondents believe AI will have a significant or transformative impact on their organization within the next 3-5 years, and 66% have made AI a strategic priority for their business. Furthermore, 88% of surveyed asset managers are actively assessing the feasibility of AI use cases and experimenting with at least one use case.

However, the report also identifies gaps in asset managers' investments in key enablers, such as people, technology and partnerships, and risk and compliance structures, which are essential for the successful implementation of AI. To fully harness the transformative potential of AI, asset managers must deploy AI for immediate impact, reshape their organizations with a strategic vision, and invent for long-term advantage.

The report concludes that the era of AI in asset management has arrived, and firms must embrace this transformative technology to overcome the industry's persistent challenges and secure a competitive advantage. Asset managers that proactively invest in AI and integrate it into their operations will be best positioned to lead the industry's transformation and thrive in the years ahead. However, the journey requires a strong commitment to developing key enablers, such as talent, technology, and risk management frameworks.

The categorization and citation of the genioux Fact post

Categorization

This genioux Fact post is classified as Bombshell Knowledge which means: The game-changer that reshapes your perspective, leaving you exclaiming, "Wow, I had no idea!"

Type: Bombshell Knowledge, Free Speech

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REFERENCES

“genioux facts”: The online program on "MASTERING THE BIG PICTURE OF THE DIGITAL AGE”, g-f(2)2389, Fernando Machuca and Claude, May 16, 2024, Genioux.com Corporation.

The genioux facts program has established a robust foundation of over 2388 Big Picture of the Digital Age posts [g-f(2)1 - g-f(2)2388].

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