Why AI is a game changer for GCC investors

The technology is transforming wealth management and looks set to supercharge potential returns

A new generation of tech-savvy investors want wealth managers to harness cutting-edge technology to optimise their investments. Getty
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Artificial intelligence tool ChatGPT has gained a lot of publicity around the world and has since become the fastest growing consumer app, with 100 million unique users only two months after launch.

Giving us a window on what an AI future may look like, it is one of a plethora of AI and machine learning (ML) technology tools transforming every industry.

Amid the GCC's massive wealth transfer to millennials, a new generation of tech-savvy investors want wealth managers to harness cutting-edge technology to optimise their investments.

Fifty-three per cent of GCC wealth management clients have emphasised the importance of being tech-savvy, according to a Marmore Mena Intelligence 2022 report.

It is no wonder that wealth managers are looking to AI and ML to maximise returns for the region’s investors — using it to enhance accuracy, supercharge analysis and generate powerful insights.

With the help of state-of-the-art technology, wealth managers can streamline operations, provide personalised and efficient services and offer clients new and innovative products.

Improving investment decision making

AI can crunch enormous amounts of both structured and unstructured data in real-time, making it possible to rapidly identify investment trends, patterns, threats and opportunities.

This accelerated and wide-ranging analysis of data enables wealth managers to make better-informed decisions, respond to changes in the market and rapidly innovate to bring about new products that maximise returns.

Enhanced personalisation

Wealth managers can use AI to analyse client financial data and develop bespoke investment strategies.

They can better understand the specific financial needs and goals of their clients and provide services tailored to their individual circumstances.

Predictive analytics will be increasingly used to guide customers towards investments based on their risk appetite, coupled with automated goals-based planning and advice.

Explainer: What is ChatGPT and why are academics concerned?

Explainer: What is ChatGPT and why are academics concerned?

Real-time customer service

Wealth managers can use AI tools such as virtual assistants and chatbots to respond to client inquiries, freeing up managers to focus on more complex tasks. An example is the use of AI-driven chatbots on Facebook Messenger.

Such automation is helping to improve the customer experience and to provide clients with live and accurate information whenever and wherever they need it.

Accelerated ESG investing

Forty-one per cent of GCC investors wished to adopt environmental, social and governance factors in investment, according to a 2021 Marmore Mena Intelligence report.

Given the complicated interplay of factors in establishing stocks’ ESG credentials and the vast amount of unstructured data used in ESG analysis, AI can play a critical role in synthesising this complex information and identifying the best ESG investments.

More efficient tax planning

Tax is a complex and critical domain for investors and with the introduction of more levies in the GCC region, AI will be a game changer.

From automated filings that identify tax-sensitive transactions or recommend tax-efficient investments, there is high potential for AI-powered planning.

Increased efficiency and streamlined operations

Wealth managers are using AI to automate manual processes such as data entry, portfolio management and client communication.

This automation is reducing the time and resource they spend on these tasks, freeing their time to focus on their clients and strategic thinking.

Speedier client onboarding

When taking on clients, wealth managers must meet stringent regulatory requirements designed to identify fraud and money laundering.

This process can be complex and lengthy. However, AI can automate these time-consuming and labour-intensive tasks while accurately qualifying clients.

The technology can screen client background information and build detailed profiles by classifying them by relevance and risk level.

This speeds up the onboarding process, providing a better and faster experience for investors.

Robust cyber security protection

With growing amounts of data stored on cloud servers, protecting the privacy of clients’ confidential information and financial data is increasingly critical.

AI software provides sophisticated, up-to-date monitoring capabilities that can flag issues, detect anomalies, eliminate fraud and protect client records.

A brave new world

We are moving rapidly towards an AI-powered world. The emergence of transformative, generative AI is set to revolutionise the wealth management industry.

Investors that work together with wealth managers stand to reap the rewards of human ingenuity coupled with the step change in efficiency that AI can bring.

They will benefit from streamlined services, increased cyber security, better informed investment opportunities and the potential for attractive returns.

However, a word of warning. Not all AI and wealth technology products live up to their promise.

The recent issues with cryptocurrencies show the importance of seeking expert advice.

Suitably qualified wealth management companies and banks use thoroughly researched and tested AI technology.

The data produced is evaluated by expert wealth managers, who know how to harness AI-powered insights for optimum results.

Francois Farajallah is head of Middle East at EFG International

Updated: March 28, 2023, 4:00 AM