Technology In Asset Management: Evolution Or Revolution?

We recently organized a panel discussion at the Embassy Of Italy, in London, during which our CEO Tommaso Migliore, along with other distinguished industry experts from Bloomberg, Ninety One & Innovate UK, commented on the current role of technology, especially AI, in Asset Management: Is it an evolution or a revolution?

(From Left to Right) Tommaso Migliore, CEO of MDOTM Ltd, Lucia Pino-Garcia, CTO at Ninety One, Stephen Browning, Challenge Director at Innovate UK & Anna Irrera, Senior Editor at Bloomberg News

The last decade has brought an unprecedented change in financial markets and the investment management industry. From Asset to Wealth Management, the rise of market complexity today calls for a modern approach to Asset Allocation and decision-making. So, what does it take to win in an era of rapidly increasing change? Between innovation, technology, diversification, and more, what will be the answer to adapting and excelling in this complexity?

During the event, MDOTM's CEO shared the stage with Anna Irrera, Senior Editor at Bloomberg News, Lucia Pino-Garcia, Chief Technology Officer at Ninety One and Stephen Browning, Challenge Director at Innovate UK, to converse on how leading investment executives navigate change with technology, including Generative and Analytical AI adoption. Inigo Lambertini, the Ambassador, attended the event, presenting the speakers and the topic of discussion.

Inigo Lambertini, Ambassador at the Italian Embassy, London

Analytical & Generative AI, the new drivers of Alpha

Achieving success in integrating a new technology primarily involves clarifying its role within the investment process. In the context of AI, we can distinguish two main branches: Analytical AI & Generative AI.

During the conference, MDOTM’s CEO focused on clarifying the difference between the two: Analytical AI excels at sifting through vast datasets, historical market data and economic indicators to identify trends and correlations that humans might traditionally overlook. It provides investment professionals with data-driven insights, risk assessments, and portfolio optimisation strategies. By automating complex data analysis, it frees up human experts to focus on higher-level strategic decisions.

Generative AI, on the other hand, plays an important role in ensuring AI explainability in investments. It accomplishes this by generating comprehensive and clear explanations for the analytical output of AI. When investment professionals or clients receive AI recommendations, Generative AI can provide detailed reports that break down the rationale behind each recommendation. These explanations shed light on why certain investment choices are made, helping to understand the technology’s reasoning, and ensuring AI explainability.

The value of AI is already widespread across the industry, with PwC, reporting that such technology, specifically Generative AI, has made financial institutions 30% to 40% more productive, and with regards to the investment management industry, nearly 90% of institutional investors believe the use of disruptive technological tools including AI will lead to better outcomes and returns from their portfolios.

AI has become non-negotiable for financial institutions. Its ability to complement investment professionals’ expertise is an additional driver of Alpha that leads to growth and operational efficiency. Financial institutions that can successfully leverage AI will be more likely to grow their market share and enhance the results they deliver to final clients”.

Tommaso Migliore, CEO & Co-Founder at MDOTM Ltd

2024, The year AI becomes a business priority

This event really touched upon how AI integration leads to a future where AI-driven investment management is not just a choice, but a necessity to have a competitive edge in the financial industry. This approach empowers investors to make informed decisions, optimize portfolios, and thrive in an ever-evolving landscape. As the financial industry continues to evolve, the partnership between generative and analytical AI will play a pivotal role in ensuring AI's maturity, explainability, and effectiveness in investment management.

Therefore, these emerging trends represent transformative shifts in how asset managers operate and provide services, promising a more agile, responsive, and effective future for the industry.

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