While recently listening to Daft Punk, pondering the increasing influence of AI on wealth management, and thinking about my latest research on The Top Emerging Technologies In Wealth Management, 2023, I decided to let the robots do all the work.
I entered the keywords “futuristic Daft Punk pyramid explainable AI emerging technology” into AI art generator app starryai to create the image above. Easy!
Writing the actual report (no, there isn’t an app to do that … yet) was a tad more difficult. We spoke with executives at dozens of companies to identify the nine technologies that wealth management firms should invest in now and which ones won’t be relevant for years to come. Our report highlights the technologies that executives should focus most on, and we explain whether firms should implement, experiment with, or simply watch these technologies.
Among the technologies we identified, AI is playing an outsize role — and 2023 is shaping up to be the year of controversial, I mean conversational, AI model ChatGPT. Its exploits are fueling a massive wave of interest in AI, especially among enterprising students trying to cut down on the time they spend writing essays. Wealth managers may soon use the technology to help investors construct portfolios or to help financial advisors quickly draft prospecting emails. But it’s important to distinguish between much-hyped and truly effective technologies.
Explainable AI (XAI) is an emerging technology that we identified as an emerging technology and is counterpoint to ChatGPT. While ChatGPT’s algorithms insights are fully “black-boxed,” XAI allows users and regulators to scrutinize the rationale of AI programs — and it allows developers to hone algorithms so that they work as expected. XAI enables wealth management firms and advisors to monitor and demonstrate that AI-derived digital financial advice and recommendations are in the client’s best interests. If an AI algorithm rejects an application for an investment account or if it allocates funds to an underperforming stock, XAI provides insight into why.
Creating free (read: bad) art with an AI app using a few keywords is harmless (or is it?) and won’t threaten real-life artists whose works hang in the MoMA or the Met any time soon. But as AI embeds itself into wealth management and investing, the stakes are much higher, necessitating the need for the oversight and governance that XAI provides. Underscoring its importance is the fact that XAI also made Forrester’s list of top emerging technologies across all industries. Most wealth management firms should be planning to implement XAI in the next two to four years.
For in-depth coverage of the other eight emerging technologies we reviewed, be sure to check out the full report (accessible to Forrester clients only). It includes insights from global wealth management professionals, as well as Forrester Analytics’ Consumer Technographics® and Business Technographics® survey data.
[This blog post was coauthored by Aaron Suiter.]