Artificial intelligence (AI) is set to transform wealth management by lowering entry barriers for startups and reshaping competition with established banks. "Artificial intelligence will bring major upheaval to wealth management, a Microsoft executive said, according to a Reuters report.
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AI's Impact on Wealth Management
According to the report, Martin Moeller, head of AI and GenAI for financial services in EMEA at Microsoft, stated that AI's ability to condense financial data will allow just a few people to offer services that previously required entire teams in a bank. "Generative AI will reshape the competitive landscape. AI will, for example, significantly lower the threshold for market entry for startups, similar to what the digitalization and internet wave did decades ago," the report quoted Moeller as saying.
AI Adoption in Financial Services
Since early 2024, Swedish payment firm Klarna has been using AI from Microsoft partner OpenAI, automating tasks equivalent to 700 employees. Major financial institutions like UBS also recognize AI's potential, with CEO Sergio Ermotti noting its role in boosting productivity and making jobs easier.
Moeller reportedly said that generative AI will reduce costs for newcomers, and can also help family offices—private wealth managers for the super-rich—that compete with wealth managers.
"Banks that have so far been barely active in wealth management could enter the business with the help of AI without having to invest much in customer advisors," he said, according to the report.
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Changing Customer Behaviour
AI's advance is gaining momentum from changing customer behaviour, with young entrepreneurs increasingly willing to manage their investments themselves, Moeller reportedly said.
As a result, many banks are leveraging AI to empower customers to consolidate information independently.
"Customers should have access to complex information 24 hours a day, seven days a week," said Moeller, according to the report. "Portfolio construction can also be handled by conventional AI."
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As per the report, AI currently does not provide advice on products or specific investment decisions. However, the next stage of development, known as "agentic AI"—which can make independent decisions without human involvement—is expected to emerge within the next two years.
