Artificial intelligence is poised to significantly disrupt the wealth management industry, according to a senior executive at Microsoft.
Martin Moeller, head of AI & GenAI for financial services in EMEA, highlighted the technology’s transformative potential to streamline services and lower the barriers to entry for new players in the market.
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AI’s Role In Reducing Hurdles
Moeller explained that AI’s capacity to process and condense financial data would enable a small team to perform tasks that traditionally required large teams in established banks. “Generative AI will reshape the competitive landscape,” he told Reuters. He compared this shift to the digitalization wave that revolutionized industries decades ago, making it easier for startups to compete with larger financial institutions.
Impact On Startups And Wealth Managers
An example of this transformation is Klarna, a Swedish payment service provider that began using OpenAI technology in early 2024 to perform tasks previously requiring 700 employees. This AI-driven approach has enabled Klarna to significantly reduce operational costs and boost efficiency.
The world’s largest asset manager, UBS, has also recognized AI’s potential, with CEO Sergio Ermotti noting that AI could enhance productivity and simplify job roles within the sector.
AI: A Game Changer For Wealth Management
Moeller believes AI will level the playing field, allowing new entrants to offer wealth management services without the large upfront investments traditionally required. He pointed out that family offices and private wealth managers for high-net-worth individuals could benefit from AI tools, enabling them to compete with established wealth management firms. Banks with minimal involvement in wealth management could also use AI to enter this space without a significant investment in customer advisors.
Changing Customer Behavior
AI’s rise is further driven by shifting customer preferences, particularly among younger entrepreneurs who are more inclined to manage their investments independently. Many banks are adapting to this shift by developing AI tools that empower customers to consolidate information and manage portfolios on their own.
“Customers should have access to complex information 24/7,” Moeller said. He also emphasized that AI would soon be capable of handling portfolio construction conventionally.
The Future Of AI In Wealth Management
Although AI cannot currently provide product advice or make specific investment decisions, the next phase of development, referred to as “agentic AI,” is expected to emerge in the next two years. This technology will be capable of making independent decisions without human intervention, further reshaping the wealth management industry.
