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AI models imperative for the future of asset management

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The need to implement artificial intelligence (AI) into daily practices in order to cope with regulatory pressures and data management, were reoccurring themes during this year’s TSAM London event. 

The increasing demand to transfer to an AI enabled model, reduce costs and overcome challenging geopolitical environments, are central issues facing the asset management industry this year.
 
During one session exploring the AI revolution in asset management, the majority of the audience, 78 per cent believed that the potential of AI will give their firms a competitive advantage.
 
Despite this, the asset management industry remains slow to fully embrace AI, with half of the audience stating that a general lack of understanding of AI tools was the main reason to not implement into daily investment decisions. Furthermore, 74 per cent said they expect fundamental disruption of the financial environment through the rise of digital in 2019. However, when asked how prepared the audience felt their company was to cope with these changes, 44 per cent deemed their company is either “not very prepared” or “not prepared at all”. 
 
Regulation and compliance also remained top of the agenda. In an open panel lead by CSS and RBC Global Management on the impacts of MiFID II and PRIIPS one year on, panellists and the audience agreed that there had been unforeseen challenges to meet regulatory deadlines and despite being a year on, some firms are still grappling with the underlying issues. To remain compliant and avoid data gaps, firms are turning towards automation. However, that also raised its own challenges with company’s still finding issues around legacy systems. When asked what the biggest challenge was in meeting clients’ deadlines, 60 per cent said that legacy systems and related restrictions presented the biggest obstacle. 
 
The annual conference also considered wider geopolitical events impacting the future of asset management. Brexit was top of the agenda and in a panel lead by Lloyd’s Banking Group, State Street Global Advisors and Muzinich & Co, considered the long-term ramification of Brexit on London’s position as a global hub for asset management. Panellists agreed that in the midst of the ongoing uncertainty, EU countries are getting Brexit ready and making their own contingency plans. Countries such as, Sweden, Austria, Malta, Finland, Spain and Belgium have put forward, or are drafting, domestic laws and/or agreements with the UK in the case of a no-deal Brexit.
 
James Hatwell, Head of Content at Osney Media, says: “Though a year on from the implementation of major regulations such as MiFID II and PRIIPS, concerns around data gaps, inconsistencies and costs were still seen as core challenges for the industry to overcome. Throughout the day, AI implementation was raised as a reoccurring solution to ease asset management processes, yet bigger steps can be made to incorporate AI to alleviate these struggles. We look forward to seeing how the industry evolves over the next twelve months, overcoming challenges presented by the ever-changing regulatory environment and adapting to a post-Brexit position.”

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