A Microsoft (NASDAQ:MSFT) executive highlighted the transformative impact that artificial intelligence (AI) is expected to have on the wealth management industry, Reuters reported.
Martin Moeller, the head of AI & GenAI for financial services in Europe, the Middle East, and Africa at Microsoft, emphasized that AI's capability to process vast amounts of financial data will significantly lower the barriers for new entrants to compete with established banks.
Moeller compared the potential of AI in wealth management to the disruptions caused by digitalization and the internet in the past. He pointed out that generative AI would reshape the competitive landscape by allowing small teams or even individuals to offer services that traditionally required extensive resources.
This shift is already evident as Swedish payment service provider Klarna has implemented AI technology from Microsoft's partner OpenAI, effectively replacing the workload of 700 employees since early 2024.
UBS, the world's largest asset manager, also recognizes AI's potential to enhance productivity and simplify jobs, as stated by CEO Sergio Ermotti earlier this month. According to Moeller, besides reducing costs for startups, AI can benefit family offices and private wealth managers by enabling banks with minimal presence in wealth management to enter the sector without significant investment in customer advisors.
The advance of AI is further supported by a change in customer behavior, with younger entrepreneurs showing a preference for managing their investments independently.
Banks are responding by developing tools that allow customers to independently consolidate information using AI. Moeller envisions that customers will have access to complex information anytime, facilitated by AI's ability to handle portfolio construction.
While AI does not currently advise on products or specific investment decisions, Moeller predicts the emergence of "agentic AI," which can make independent decisions without human input, within the next two years. This next stage of AI development promises to further revolutionize the wealth management industry by providing even more sophisticated capabilities.
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