AI is drumming up a lot of interest in the wealth management industry, as it promises to transform business models to make them more efficient.
In the latest evidence of this, BlackRock, the world’s largest asset manager, is setting up a new AI lab, dubbed BlackRock Lab for Artificial Intelligence, and an internal Data Science Core unit, as part of the company’s Tech 2020 plan, according to an internal memo seen by the Financial Times.
Every part of BlackRock's business is already augmented by AI, and the lab will aim to strengthen its efforts to bring the benefits of AI to its clients, according to Rob Goldstein, BlackRock’s chief operating officer.
Here is why BlackRock's AI lab will likely be good for the company:
- BlackRock has a demonstrated track record of leveraging AI. BlackRock uses AI to get more insight into the growth of target companies, which likely makes it easier to pick suitable firms for a portfolio. For instance, it uses text analysis to go through transcripts of earning calls, helping it to gauge how a management team feels about the growth prospects of the company. Additionally, it looks at geolocation data from smartphones to get more insight on which retailers are popular.
- The new AI lab will help BlackRock to further adopt the technology in its business. The lab will allow BlackRock to evaluate and explore new use cases of AI throughout its business, helping it to become more cost- and time-efficient. This is especially true in light of the company's already extensive experience with the technology. In the future, and with more insight into the technology, AI could potentially be used to augment the work of human employees throughout the business.
While BlackRock has been a forerunner in adopting AI, other legacy players are lagging behind.BlackRock is known for its proactive approach in implementing new technologies, including AI. This strategy allows it to make its operational processes more efficient and thereby more successful. Other incumbents would be wise to follow suit and further explore the use AI for their businesses, as this can potentially cut costs or open new streams of revenue for a company. With increasing competition from digital wealth manager startups, it seems likely that more legacy players will start to look into the technology to avoid falling behind.
BI Intelligence, Business Insider's premium research service, has written a detailed report on AI in banking and payments that cuts through the hype to offer an overview of different types of AI, and where they have potential applications within the finance industry. In full, this report:
- Offers an overview of different types of AI and their applications in payments and banking.
- Highlights which of these applications are most mature.
- Offers examples where FIs and payments firms are already using the technology.
- Provides descriptions of vendors of different AI-based solutions that FIs may want to consider using.
- Gives recommendations of how FIs and payments firms should approach using the technology.
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