Introduction
The debate surrounding the impact of Artificial Intelligence (AI) on various industries, including financial services, is far from over. While concerns about job displacement persist, the Financial Conduct Authority suggests that AI could bridge the advice gap in the industry. Interestingly, many firms have already adopted AI technologies to enhance their services. This article delves into how AI is currently being utilised in the UK’s financial advice sector.
The Current State of AI Adoption
According to a survey by the CFA Institute, 56% of its members reported that their firms routinely use AI and big data solutions for data analysis. Additionally, 26% said their firms employ these technologies for decision-making. This indicates a growing acceptance of AI within the industry.
Case Studies: AI in Action
Tembo: Streamlining Mortgage Advice
Digital mortgage broker Tembo has developed an in-house, AI-driven mortgage criteria tool named “Tembo AI.” This tool uses data from over 30 lenders and client interactions to provide accurate mortgage-related advice. Geoff Wright, Tembo’s CTO, emphasises the tool’s ability to provide precise answers while reducing the time staff spend on complex queries. The AI system is designed to respond only when it has a high level of confidence in its answer, thus ensuring accuracy.
AdviceBridge: Enhancing Retirement Planning
AdviceBridge, a digital retirement advice firm, uses reinforcement learning algorithms to improve the quality of financial advice. Bruce Ely-Johnston, the firm’s Chief Commercial Officer, notes that the system learns from each client’s data over time, thereby continually improving the advice it offers.
Wealth Wizards: Boosting Adviser Productivity
Wealth Wizards has been experimenting with AI to improve adviser productivity and quality assurance. Their technology can pre-populate fact-finds in real-time based on verbal conversations between advisers and clients. They also use machine learning models to identify anomalies in advice cases across a firm.
The Future of AI in Compliance and Client Interactions
True Potential CEO Daniel Harrison says that AI is being used to streamline information gathering and compliance processes. For instance, AI can automatically ask for more information when clients make vague requests, acting as an initial safeguard in compliance processes.
Investment Management and AI
Rhodri Preece from the CFA Institute notes that AI is starting to be deployed across various tasks in investment management, from client onboarding to portfolio construction. However, he also points out that AI adoption is still in the experimental stage for most firms.
Conclusion
While AI adoption in the UK’s financial services industry is still evolving, its impact is undeniable. From improving adviser productivity to enhancing client interactions and compliance processes, AI is set to play an increasingly significant role. As firms continue to experiment and adopt AI for targeted use-cases, we can expect its influence to grow exponentially in the coming years.
Note: This article is based on an FT article from FT Adviser written by Chloe Cheung, and insights from various industry experts and surveys, including those from the CFA Institute, Tembo, AdviceBridge, Wealth Wizards, and True Potential.
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