TL;DR:
- The rapid development of the ChatGPT voice robot highlights the potential of AI in the financial sector, particularly for smaller providers.
- CEOs in the industry, including UBS’s Sergio Ermotti, acknowledge the transformative power of AI in delivering better client services.
- Globalance, a sustainability-focused Swiss asset management bank, embraces AI with its “AI employee Globana” to provide personalized information and explore future applications.
- Smaller players have an advantage in implementing AI applications due to faster implementation and declining technology costs.
- There are two camps in Swiss finance regarding AI: optimists who see opportunities to reduce costs and improve user experiences and skeptics who believe personal client relationships are irreplaceable.
- Compliance, risk management, and process automation are initial areas where AI is expected to make an impact in banking.
- Swiss data limitations and the cost of building AI applications from scratch are challenges faced by companies like Selma Finance.
- UBS utilizes AI tools like “UBS Advice” and the “Next Best Action” approach to enhance risk management, client recommendations, and process efficiency.
- The integration of AI in banking aims to make processes more efficient for customers and employees while leveraging vast volumes of data.
Main AI News:
The disruptive potential of artificial intelligence (AI) in the financial sector is being demonstrated by the rapid development of the ChatGPT voice robot. Recent research by finews.com reveals that small providers have a unique opportunity to make significant strides in this new landscape.
Even top executives like Sergio Ermotti, CEO of UBS, are acknowledging the importance of AI. At a recent industry gathering, Ermotti, who is fully engaged in integrating Credit Suisse, spoke about the immense potential of this technology. He explained how AI can enhance the quality of service delivered to clients, paving the way for a better customer experience.
Reto Ringger, CEO of Globalance, a sustainability-focused Swiss asset management bank, goes a step further. In an interview with finews.ch, he boldly stated that AI would be disruptive for the industry. He highlighted how ChatGPT plug-ins are already capable of setting up personalized investment portfolios within seconds. Ringger predicts that this technology will continue to advance rapidly, posing a critical question: why would anyone pay a bank 100 basis points for the same service when AI can deliver it more efficiently?
Globalance Takes the Lead
Ringger believes that waiting for customers to discover the benefits of AI is not the right approach. Instead, he insists that every division within the bank should embrace the potential of this new technology. To that end, Globalance has taken the first step by introducing its “AI employee Globana,” an avatar that provides information on the possibilities of AI from an investor’s perspective through short videos. While acknowledging that this is somewhat of a gimmick, Ringger was pleasantly surprised by how quickly and cost-effectively Globana was launched. He is now considering expanding its capabilities to provide personalized information to customers based on their specific interests.
Ringger further emphasizes that smaller players have an advantage when it comes to AI applications. They can implement these technologies more swiftly, and as the costs continue to decline, they can keep pace with the rapid development in this field.
Two Perspectives
According to Sandro Schmid and Nourdine Abderrahmane, partners at LPA, a technology consulting firm, there are currently two camps in Swiss finance regarding AI. Some individuals are optimistic and recognize the new possibilities, seeing AI as a means to reduce costs and enhance the user experience. Abderrahmane adds that generative AI is an excellent tool for managing investment data effectively.
However, skeptics argue that private banking is based on personal client relationships and that AI cannot replace the human touch. Schmid believes that both viewpoints are not mutually exclusive. Instead, AI should assist human advisors, providing them with valuable tools to serve their clients better. It is crucial not to prematurely dismiss the potential of AI, especially as authorities like the Swiss Financial Market Supervisory Authority (Finma) are becoming increasingly interested in this topic. Schmid emphasizes that Switzerland must seize these opportunities, or it risks missing out.
Swiss Data Challenges
Swiss financial technology company Selma Finance, one of the pioneers in digital asset management, is actively embracing the ChatGPT era. They recently raised approximately 1.3 million Swiss francs ($1.4 million) through crowdfunding to explore the possibilities of AI-driven advice. CEO Patrik Schaer explains that the company is currently testing various use cases for AI. For example, they are utilizing AI to determine how to combine Pillar 3a private pensions with other investment goals. However, Schaer points out that the lack of accessible data on pension provisions in Switzerland poses a significant hurdle. Additionally, building AI applications from scratch without existing plug-ins can be costly.
Customized Approaches
The initial applications of AI in banking are expected to focus on compliance rather than asset management, according to Schmid and Abderrahmane. Compliance tools are already being employed to combat money laundering and KYC (Know Your Customer) applications. Risk management and process automation are other critical areas where AI can play a significant role.
They assert that improved processes will ultimately benefit customers, and algorithms can facilitate more personalized approaches, strengthening the bond between customers and financial institutions. The “one size fits all” approach will no longer be necessary.
Portfolio optimization holds tremendous potential for AI, with the models continuously improving. Moreover, the vast amount of data available can be efficiently processed to generate meaningful insights for advisors.
UBS’s AI Applications
UBS has quietly been harnessing the power of AI for years. One of its tools, “UBS Advice,” performs a nightly risk check on investment portfolios and offers suggestions to clients. Another recent addition is the “Next Best Action” approach, which has been operational in UBS Switzerland since 2021. It analyzes client behavior and provides recommendations that bank advisors can share with their clients. Although this model relies only marginally on machine learning, it has proven to be effective.
Emphasizing Efficiency
UBS has categorized its efforts in AI and automation, aiming to enhance processes and make vast volumes of data usable, ultimately improving efficiency for both customers and employees. With the bank needing to save approximately $8 billion by 2027, amidst integration costs of up to $10 billion, the opportunities for AI experiments may be limited, but the potential benefits remain significant.
Conclusion:
The disruptive potential of AI in Swiss banking offers both opportunities and challenges. Smaller providers have a window of opportunity to leverage AI, while established banks like UBS are integrating AI to improve efficiency and enhance client services. However, the role of personal client relationships and the limitations of Swiss data present challenges that need to be addressed. As AI applications continue to evolve, embracing this technology and its potential benefits will be crucial for the Swiss banking market to remain competitive in the digital era.
