Despite the growing size of the global investment management industry, recent findings point to the persistent elusiveness 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 outlook from Deloitte has shown that while integrating AI for process efficiency improvements may be common across the industry, examining how these capabilities may be deployed to drive sales and distribution is expected to gain traction next year.
According to Deloitte, some investment managers are already hopping on the opportunity, with the likes of Amundi, Wealthfront and Vanguard developing in-house AI-powered tools to support customised portfolio recommendations based on specific customer risk tolerances.
“These AI-powered tools are designed to analyse data from client interactions to gain real-time insights at both macro and micro levels of investment managers’ client base,” the company wrote.
“Equipped with this level of detail about the current needs of their clients, sales teams can more effectively tailor specific fund recommendations.”
Meanwhile, other firms are beginning to use generative AI to develop personalised marketing strategies for existing and prospective clients.
This comes as 60 per cent of surveyed investment management firms are using AI in their data-related distribution undertakings to a “modest” degree, while just 11 per cent describe the usage as “heavy”.
This is despite an increase in use cases.
However, Deloitte believes that in 2025, usage of AI in distribution initiatives is expected to expand at both “modest” and “heavy” degrees, as the potential benefits to revenue growth become clearer for the investment management industry.
Promise of industry disruption exceeds expectations
This year, Deloitte highlighted, AI technologies are being viewed as a potential disruptive force in the investment management sector.
“Now, it seems that promise has surpassed expectations,” the company said.
At the same time, companies are now encountering the obstacle of harnessing AI solutions at scale without prior models to guide them.
As such, it’s becoming increasingly critical for investment managers to be vigilant when integrating such technologies, according to Deloitte.
“Those that lag in realising efficiency or identifying ways to drive innovation may find it challenging to remain competitive in 2025, because efficiency in investment management operations is not just a margin enhancer but could also have potential to drive alpha,” the report said.
“Considerable transformation is still looming on the horizon.”
