The use of AI in asset management
Updated: Jan 20, 2019
A recent industry survey of asset managers and asset owners across Asia Pacific sought to understand participants’ current and planned use of artificial intelligence (AI).
For the purposes of the survey the definition was kept simple - AI are systems that can perform tasks that typically require human intelligence.
Conducted by Shoreline, the intent of the survey was to answer three key questions:
1. What AI asset managers and owners are using or planning to use?
2. How is it being used?
3. What benefits are being realised
Seventy nine percent (79%) of respondents were asset managers and twenty one percent (21%) asset owners. Asset manager respondents ranged from global players down to boutiques. Most asset owners were mid-sized superannuation and pension funds with a few large sovereign funds also participating. The first chart highlights the spread of FUM of respondents.
56% of respondents believe AI will be transformational or a competitive necessity for their firms within five years
21% of respondents are currently using some form of AI. Of those using AI, 90% are asset managers
60% of AI users are applying it within investment management activities, with ‘machine learning’ the primary type of AI in use
The main benefit claimed by users is enhanced investment decisions followed closely by operational efficiency improvements
All AI users are planning additional investment in the next 12 months. The priority area of investment is in investment management activities
A substantial portion (80%) of those respondents not currently using AI are considering its use
Those considering AI usage are firmly focused on applying AI to investment management problems (83%), with stock screening and providing an unbiased investment input the top two use-cases
The most interesting insight is the disconnect between the respondents’ view of the impact AI will have on their organisations (and indeed the industry) and the lack of action by most respondents. Although most respondents believe AI will have a significant impact on their business and its competitiveness, many have not yet started on the challenging journey to build the required capability.
The majority believe AI will be transformational – and that transformation will happen relatively quickly as seen with other disruptive technologies in recent history. It is not a matter of ‘if’ but ‘when’ use of these technologies will be essential for asset managers to remain competitive.
Like many technologies, the complexity and difficulty in application is not in the technology itself, but rather the cultural and organisational shifts that must occur to accept and accelerate its application and the realisation of associated benefits.
Shoreline has therefore established an AI practice to assist clients on the journey of exploring and building capability in the application of AI technologies and methods suitable for their circumstances.
For the complete survey results, please visit: www.shorelineawc.com/our-thinking