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AI & ML has played a huge role in revolutionizing the wealth management industry

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In an interaction with Express Computer, Riyaz Ladiwala, Head- Technology and Operations, Edelweiss Wealth Management, shares insights into the factors driving the digital transformation of the wealth management sector and how the company has transformed its services with the help of technologies like cloud, data analytics, and AI/ML among others.  

How has technology reshaped the wealth management ecosystem in recent times? What are the factors driving the digital transformation of the wealth management sector?

Technology has played a huge role in lowering market barriers, creating payments and an identity ecosystem, and leveling the playing field for a completely new set of wealth managers.

But truly said, the role of technology has been largely shaped by two drivers:

1. The emergence of an ecosystem aided quick change and deployment.
2. The growth of FinTech, EdTech, and all kinds of Tech over the past 5 years has seen an unprecedented level of wealth creation in India. The needs of this new client segment, their expectations, and aspirations are significantly different from the earlier generation.

Some of the key areas which have influenced tech for wealth management include:

1. Availability of insights to leverage richer advisory, detailed analytics, and tailor-made financial models with razor-sharp precision.
2. The wealth management space is gradually moving towards extreme personalization of financial products. Deep learning tools aid this by using cognitive computing and cutting-edge client sentiment analysis.
3. Open and modular architecture enables institutions to remain ahead of the technology curve. New capabilities, features or functionality can be rolled out in a fraction of the time it would take to upgrade to an entirely new platform. In addition, open API architectures provide interconnectedness of platforms that can easily integrate with multiple systems and offers a 360-degree customer view to wealth managers and clients.
4. SAS platforms have enabled functional specialization and faster rollout to clients.
5. Mobility for enhanced collaborative communication, onboarding, branding, and marketing.

Highlight the key technology enablers that are accelerating the disruption being witnessed in the wealth management industry?

1. Cloud computing to leverage data for richer insights, running data analytics to provide insights and client sentiment analysis.
2. Digital Identity to ensure democratized access to all services.
3. A Digital Data Management for established financial advisors that enables unified client experiences across all user devices and platforms.
4. Application programming interfaces (API) to facilitate the rapid and automated transfer of data, whilst enforcing high standards of security throughout the process and eliminating manual risks.
5. AI, ML & advanced analytics to derive insights from structured and unstructured data sources for an accurate “big picture” view of customer demands and financial trends.
6. Ease of Account opening – DIY platforms help clients to open accounts on the go.
7. Ease of transactions – Strong API infrastructure has reduced the complexity of linkages between exchanges, banks, and clients.
8. Automation of incumbent systems – In addition to catering to the needs of external stakeholders, businesses are increasingly concentrating on automating their systems.

As one of the leading wealth management firms, how have you transformed your services with the help of enterprise technologies like cloud, data analytics, AI/ML, etc.?

At EWM, we have spent a significant amount of time creating platforms that are cloud-ready and migrating legacy platforms to the cloud. This has helped EWM to deliver software directly and securely over the Internet as a service. This has resulted in a considerable reduction in cost and implementation time.

In addition, we have spent considerable time capturing structured and unstructured data around client and RM activity. The application of an intelligent AI/ML layer has helped us understand client behavior and structure our product offerings, advisory, and communications accordingly.

Heavy investment has been made to shift from traditional reporting platforms to user-friendly reporting tools. The availability of our internal reports and analytics on dashboards has ushered in a culture of data-driven decision-making and monitoring of KPIs.

EWM has also leveraged the FinTech ecosystem to improve the client onboarding experience. Using AI tools for identity and document scanning, we have significantly reduced onboarding times and errors. At the enterprise level, we have also deployed BOTs to perform tasks more efficiently.

All the above has been achieved with a focus on data security and governance. We continue to invest heavily in upgrading our platform with the latest and state-of-the-art InfoSec tools.

What are some of the technology initiatives undertaken specifically over the past two years that helped Edelweiss Wealth Management navigate through unprecedented times?

Some of our key technology initiatives over the past two years have been:

1. The creation of a WFH ecosystem has enabled efficient employee productivity coupled with appropriate security of EWM perimeter.

2. Accelerated digitization in onboarding, reporting, and advisory by collaborating with leading Fintech and leveraging the India Tech Stack optimally.

3. Virtual conferences and roadshows held for institutional clients to meet investors virtually and tap investment opportunities.

4. Virtual employee engagement and Online RNR and training program helped improve employee morale

5. Launched new platforms – for all client segments across trading and reporting. Servicing platform for UHNI clients is our highlight.

6. Scaled up our platforms and back offices through cloud adoption to efficiently handle larger volumes

Highlight the digital innovations being brought into your services that have enriched the overall customer experience?

Our client acquisition strategy has been boosted following the launch of our digital platform. We now handle more than 4x volumes with the same team. Digital access to clients for transactions, services, and reports. Superior tech integration has empowered us to offer multi-products on a single platform enabling clients to have a holistic relationship with the firm. Virtual conferences and roadshows held for institutional clients to meet investors virtually and tap investment opportunities.

Automated risk management for client transactions. Over the past 2 years, all our businesses saw volumes increase by 2 to 4x thereby highlighting the need for this platform. Internal process automation – RPA bots were introduced to perform mundane tasks for faster processing of client requests, resulting in error-free execution.

How has AI/ML as a technology been beneficial for the wealth management industry? Cite examples where Edelweiss Wealth Management has been leveraging AI/ML to automate the processes?

AI / ML has played a huge role in revolutionizing the wealth management industry globally. Following are the few areas where its benefits are clearly visible:

Faster Client On-boarding

AI can provide the required impetus to intelligently automate certain processes and speed client onboarding. Smart QC through AI-powered logics, trained OCRs with fuzzy logics using ML and system validations ensures quick and absolute error-free onboarding. Using API integrations with credit bureaus for client data, RTAs for real-time confirmations and highlighting mismatches on the go has decimated the overall onboarding time.

Transparent Communication

We have enabled transparency and accountability through proactive communications with our clients. AI-enabled systems have empowered us to expand our reach from conventional Email and SMS modes to more advanced modes like WhatsApp and CTA-driven notifications to cater to clients at every touchpoint.

Progressive Transparency & Accountability

To retain and gain the loyalty of top clients, wealth managers/financial advisors must re-evaluate their internal operations and provide relevant messaging to give clients more insight and control over their portfolios. Advisory firms should also consider making their entire organization more transparent with the help of AI, including how fees are structured.

Identifying Affinity towards Products

Using the analytics engine, we identified new investment opportunities and provided increased personalization to our clients. Multiple data models prepared through AI-generated insights have helped create a product propensity model for our research and advisory teams.

Portfolio Rebalancing Recommendations

Using AI in portfolio management equips one with tools that can proactively produce insights that guide and recommend strategies to financial advisors. Proactive rebalancing recommendations consider multiple economic indicators and even demographic data. The result allows financial advisors to tweak their larger investment strategy and further personalize their services.

Any particular technology/technologies that you are betting big on that would transform your services in the near future?

Below are the trends that will be best set up to stay ahead of the pack in the wealth management industry.

Friendly with Fintechs

To adapt to changing consumer preferences, traditional Wealth Management firms innovate through a combination of build, buy or “borrow” relationships. The build-and-buy approaches can prove costly, risky, or slow to market, hence, more traditional players will increasingly “borrow” from fintech in future.

At EWM, we continue to collaborate and experiment, which will prove crucial in understanding which investments will yield returns and strengthen customer relationships. Testing new strategies with a subset of customers, financial advisors, or markets before investing in broad rollouts will inform critical decisions.

Complex Analytics for Complex Customer Journeys

Wealth Management Firms have invested massive resources in developing great online and mobile experiences. Consequently, customer journeys have become more complex than ever: It is increasingly rare for a customer to open an account or shift balances without research and interactions across multiple channels.

Analytics, meanwhile, struggle to keep pace with the speed of this omnichannel shift. While 65 percent of marketing leaders plan to increase digital spending next year, most organizations report no reliable measurement for online campaigns. Many Wealth Management Firms have set up “data lakes” to aggregate disparate data sets with a disciplined, omnichannel analytics function on top of those data lakes.

Revolutionary Inputs to Risk Assessment

Incorporating non-traditional behavioural data into acquisition targeting and risk modeling has already demonstrated value—and will only continue to grow in popularity. These alternative data sources—which draw from social network activity, and mobile app usage have presented opportunities to better understand and reach customer segments.

Long-term Perspectives on Big Bets

Promotions have grown tremendously in recent years amidst a heated customer acquisition arms race. With cost per acquisition reaching new heights, banks have adopted a laser focus on tracking the behaviour of recently acquired customers to understand the long-term impacts of different offers on portfolios. Accurate forecasts at scale can inform critical investment decisions today.

Given high acquisition costs and enticing offers from competitors, many Wealth Management firms direct more resources towards customer retention and relationship growth. To make the most of such large-scale investments, leading Wealth Management firms are focusing more on targeting the right customers—with the optimal messages and projecting the long-term performance of those bets.

Based on the above trend, at EWM we are closely monitoring or evaluating the following technologies:

1.Blockchain for financial transactions

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