December 21, 2016

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Bolstering Wealth Advisory Services through Cognitive Computing

“The risk of investing too late in smart machines is likely greater than the risk of investing too soon.” – Gartner

The disruptive investing landscape

The anticipated global wealth upsurge, owing to the increasing number of millionaires and unprecedented growth of the middle class, is urging wealth management incumbents to adopt disruptive technologies to stay competitive.  

Digital technology is transforming the investing landscape and there’s an accompanying shift in investor behavior, particularly in the way they access information and use it. The emerging breed of mobile, well-connected, and well-informed investors is now on the lookout for personalized, real-time advice when it comes to wealth management services.

Today, they are empowered to take their own decisions, what they seek is validation of their understanding of risk, guidance, and greater collaboration. Advisors are grappling with the pressure of staying ahead in terms of investor knowledge; gathering accurate insight for the right investor market, resolving queries, and offering tailored wealth management services.

Let’s look at some of the critical queries faced by advisors –

  • How does a global crisis affect industry demand and what are its implications?
  • How will companies perform post the industry hike?
  • What are the bull and bear opinions on a particular stock?
  • What is the outlook on USD and AUD?
  • How will new regulations impact investor portfolio?
  • What are the various trading schemes that wealth management firms have to offer?

The revolutionary cognitive computing system

To address the aforementioned concerns, advisors need a robust digital wealth management system. Such a system deduces the context and addresses the queries accordingly. Additionally, it is mobile, delivers meaningful advice, and is widely accepted. Simultaneously, wealth firms need to bolster the productivity of their advisors and empower them to provide consistent wealth management services.

A smart and efficient cognitive computing system, like IBM Watson, operates successfully to meet aforesaid demands for investors, advisors, and wealth firms. Watson, a brainchild of IBM technology scientists, was created after decades of research in cognitive computing. It supports a broad range of functional areas across multiple industries like CRM, retail wealth, finance, retail, wealth management, travel, and hospitality.

Cognitive computing, aka artificial intelligence, mimics the human brain while approaching a problem, and improvises based on previous learnings. These systems showcase remarkable problem solving capabilities using techniques of natural language processing, pattern recognition, and data mining beyond human intervention.

A digital asset management system augmented by cognitive computing has the ability to process bulk company reports, analyst reports, product brochures, and risk profiles. It subsequently analyzes them with a wealth firm’s internal structured/unstructured information to deliver personalized and relevant recommendations based on investor profile. What distinguishes it from other deterministic systems is the fluid probabilistic nature which allows it to evolve from previous interactions and improve the accuracy of recommendations. This allows advisors to open up and position new or different perspectives. It can be seamlessly integrated by wealth management firms as a customized and automated information system for enhanced digital asset management.

According to IDC research, the global cognitive computing (AI) industry is currently worth around USD 4.5 billion, which is likely to double by 2019. Undoubtedly, the cognitive computing technology holds great promise to disrupt and transform the business of digital wealth management. It strongly augments the human aspect of wealth advisors and empowers them to engage effectively and provide differentiated financial advice. Wealth management organizations are cognizant of this and are keen to take advantage of digital wealth management for enriching client experience and influencing multiple KPIs.