As has become customary at the beginning of a new year, I sat down to contemplate some of the key themes I expect to impact Asset and Wealth Management in 2024.
In some years, I have been struck by how difficult it can be to share an interesting take on the industry, but looking ahead to 2024 feels somewhat different. The rising star of 2023, Generative AI, is joined on my list by two themes that have been slowly gathering pace; Evolving Data and Data Governance, and Tokenisation.
Generative AI – finding clarity and focus
It feels as though the whole world was taken by surprise at just how quickly generative AI evolved in 2023. In different guises, AI has played a role in our industry for some time now – perhaps most notably in the form of process automation.
Generative AI promises something entirely different, however. With its revelatory ability to handle all manner of complex problems, it opens possibilities for transformation in the front office process for both traditional and systematic asset management, alongside further operational efficiencies.
In 2023, difficulties identifying appropriate use cases and material concerns around security and accuracy in the form of ‘hallucinations’ threatened to slow the adoption of financial services at large.
I expect to see significant progress in 2024 – with opportunities for almost all segments and stakeholders in our sector. However, the promise of enhanced research capability at a lower cost has the potential to be truly transformative.
Evolving Data and Data Governance – keeping pace with change
Data continues to be a hot topic for many firms. The buy side data landscape never stands still, whether driven by regulation, clients, or the front office. Evolving demands place significant pressure on all firms to continually invest in delivering for their stakeholders.
The concept of data at rest is beginning to change how many look at transforming and moving data both within and outside of organisational boundaries. In 2023, many made progress in adopting tools such as Snowflake to embark upon this journey.
This empowerment brings fresh control challenges, however – legacy ‘a la carte’ options allowed for discipline. It was easier to track what stakeholders were ordering from the menu.
Moving towards the more buffet style at rest consumption brings fresh governance risks – whether around the cost of data or computing, or security, accuracy and appropriateness of the data being used, the evolution of the data landscape promises to provide many sleepless nights but also an opportunity for greater stakeholder empowerment for those that can get the balance right.
DLT and Tokenisation – are you ready to catch the wave?
The Bitcoin rollercoaster may steal the headlines, but the underlying distributed ledger technology offers our industry considerable opportunity that is only just being tapped into. From the possibility of instantaneous settlement to the personalisation of investments and the democratisation of illiquid assets such as infrastructure, the potential scale of impact on investment management is huge.
Many firms explored POCs with the technology in 2023, and I expect that to continue in 2024.
If ETFs were the asset management equivalent of the move from physical cash to credit cards, tokenisation could be our digital banking moment.
Adoption impacts almost all aspects of the operating model. Joining the early experimenters will allow firms to build an institutional understanding of the technology and position themselves to catch the wave when it finally hits.
Over the coming weeks, I will share a more detailed look ahead at 2024 on each of these topics in conjunction with one of our in house experts.
Best wishes for what I anticipate to be an exciting 2024 as we incorporate emerging technologies and further evolve and empower the industry to succeed.
