Adoption of generative artificial intelligence (genAI) is increasing among fund managers, impacting functions such as portfolio management, fund administration, and marketing.

In the realm of marketing, genAI is proving a game changer, enhancing processes and experiences through predictive analytics, automation and data-driven insights.

These innovations are leading to more effective messaging, stronger investor engagement, and improved risk controls, according to new research by SG Analytics, a global research and data solutions provider.

The research, based on a survey of 80 fund management firms, revealed that a growing number of fund management firms are embracing AI, leveraging the technology in a variety of ways to enhance marketing strategies and operational efficiency.

42% of respondents identified automated content creation as the primary application, while 36% pointed to the use of predictive analytics to monitor and respond to market trends. 13% highlighted customer sentiment analysis and 7% mentioned chatbots for customer service.

Firm-specific trends

The study highlights distinct adoption patterns among different types of financial firms. In particular, asset management firms are the biggest adopters of genAI for chatbots, as well as predictive analytics for market trends, and automated content creation. These firms are prioritizing both market forecasting and enhanced client interactions.

Wealth management firms, meanwhile, are particularly advanced in the use of genAI for customer segmentation and sentiment analysis. This reflects a high emphasis on comprehending client perceptions and the depth of client engagement.

Finally, fund management firms show a preference for automated content creation, and predictive analytics, indicating a strategic focus on optimizing marketing campaigns.

Improving marketing capabilities

Most respondents expressed strong confidence in the potential of AI to enhance the effectiveness of marketing content across various functions.

67% of the respondents believe that AI can significantly improve campaign management, indicating strong confidence in the ability of the technology to streamline and optimize marketing initiatives. An overwhelming 97% believe that genAI can enhance personalized marketing and tailor content to individual preferences, resulting in more engaging communications.

In addition, 84% of respondents reported that genAI can improve engagement through data insights, while 86% agreed that genAI can enhance customer segmentation processes, indicating a recognition of the role of AI in better targeting and understanding audiences.

Challenges remain

Despite strong enthusiasm for genAI, the study also highlighted several concerns related to the use of genAI in fund marketing. The top three concerns cited were data security, high implementation costs, and lack of in-house expertise.

Of the total, 42% of respondents from asset management firms identified data privacy and security as their primary concern. This reflects the criticality of ensuring compliance and protection of sensitive financial data.

Respondents from wealth management firms expressed the most concern about the high cost of implementation, with 50% indicating this as a primary issue. This concern may stem from the perceived financial investment required to adopt genAI effectively.

Finally, asset management firms identified the lack of in-house expertise as the highest concern at 50%, indicating a significant awareness of the need for skilled personnel to implement and manage genAI solutions effectively.

In addition to technical and financial concerns, organizational resistance (33%) was identified as the biggest hurdle to genAI implementation, highlighting the need for proactive change management strategies. 24% cited technical complexity, while 18% emphasized data security, underscoring the need for robust security protocols.

A further 16% identified a shortage of skilled personnel as a key hurdle, emphasizing the importance of training and recruitment. Meanwhile, 10% cited high costs, suggesting a need to demonstrate clear return on investment (ROI) for genAI investments.

GenAI adoption increases across wealth and asset management

Beyond marketing applications, genAI is seeing rapid adoption across the broader wealth and asset management industry. A survey of 227 wealth managers, asset managers, and hedge funds conducted in Q4 2023 by EY-Parthenon revealed that an overwhelming 98% of respondents had either already invested in genAI, were planning to invest, or expressed strong interest in learning more about the technology.

Firms cited productivity enhancements, client experience enhancements, cost savings, and service quality improvements as key drivers for adopting genAI. Front-office investments were expected to focus on chatbot support (63%) and data entry (60%). In the middle and back-offices, 61% of respondents planned to invest in automating client report generation, while 58% aimed to enhance data aggregation processes.

However, wealth and asset managers identified client onboarding as the top impacted areas in terms of cost savings and operational impact from genAI deployment.

Featured image: Edited by Fintech News Switzerland, based on image by Phonlamaistudio via Freepik