In 2023, it is evident that AI plays a crucial role in shaping the contemporary landscape of the financial services industry.

We caught up with Uthra Parameswaran, Chief Compliance & Risk Officer at StashAway to find out how Wealth Banking is adopting AI and the evolution of a Wealth Manager’s role.

With nearly 87% of financial service customers beginning their journey online, digital banking isn’t going away any time soon. 

In fact, with new developments in technology, and the advancement of AI, the role of humans in the banking cycle is shifting towards a more advisory and strategic position. AI-powered chatbots and virtual assistants are becoming proficient at handling routine transactions and inquiries, allowing human bankers to focus on more high-value tasks such as financial planning, risk assessment, and building customer relationships. 

As a result, the banking industry is experiencing a transformative shift where technology complements and enhances the human touch, ultimately offering customers a more efficient and tailored banking experience.

 But, how are these experiences changing the world of wealth investment and banking?

To start off, can you explain what StashAway does?

Sure! StashAway is an investment platform that is tech-led. 

We try to eliminate human biases in investment decision-making and the advice provided by leveraging technology. Our mission is to make it easier for anyone in the world to have access to a diversified range of assets and empower them to have a planned and systematic approach to building wealth for the long term. With StashAway, you can start building your wealth portfolio with as little as a $1 investment—no millions required!

That’s interesting. So, when a client signs up with you, what does your process look like?

We are a fully digital solution and the onboarding experience is automated. This particularly attracts Gen Z and Millennial clients who are just starting to get into wealth management.

Typically, when you go to a financial advisor, you will be asked questions about your income, financial needs, and risk appetite. These are then analyzed through Excel sheets or other tools after which a Wealth Manager gives you advice which is then linked to products. This has a massive amount of human calibration and bias in it.

At StashAway, the customer onboarding process is entirely non-face-to-face and tech-driven. When a client signs up, the system calibrates their risk levels based on a suitability engine that is modeled around customer data pertaining to their income, expenses, financial goals risk appetite, and so on.  The human aspect for the majority of our customers comes only in the form of customer support and experience and not for financial recommendations or calibration of risk levels.

The platform accepts customers from across all countries although StashAway only markets its platform and solutions in the five markets where we operate physically and under a full-fledged capital market license. 

And what do your clients receive after this process is complete?

Our clients can then invest in our Managed portfolios or Flexible Portfolios based on their recommended risk levels.

 These portfolios are created using curated Exchange Traded Funds (ETFs) as against individual stocks or bonds. 

Given that a particular ETF represents an asset class, portfolios created with underlying ETFs provide diversification and are further optimized to risk levels and market cycles through our own trademarked investment framework known as Economic Regime Based Asset Allocation (ERAA ).

 Clients can also opt to stay with us in our Cash Management products. One of StashAway’s latest additions is a guaranteed return portfolio, designed to help customers secure the best returns for liquid cash across various tenors. There are no minimums or maximums; it’s just a straightforward and simple Cash Management solution. We call it “Simple Guaranteed!”

At StashAway, are you fully AI-led or do you work with a more hybrid model?

As much as we’d like to be fully digital, we are not yet an AI-led investment platform. We operate within a hybrid model for certain types of customers (ex: High Net Worth and Family Offices). 

While almost all of our platform aspects, investment aspects, and customer experience are digital and data-driven, StashAway has just started to experiment with using AI.

If a long-term customer’s financial needs change according to their life stage, how do you make real-time changes to their portfolio and change what you recommend?

This process starts with an information update and periodic reviews of customer profiles and portfolios.

While we have a client service and experience team who help people all along their journey with StashAway, our clients are encouraged to assess their evolving needs, and support is offered through portfolio “Insights” within the app. The next significant development will be in the way we tailor these insights for individual use cases. This approach could transform financial reviews, portfolio assessments, and updated recommendations into a fully digital solution.

In the future, we’d like for AI to come in and be able to answer these basic, straightforward questions via an augmented chatbot experience with smarter, personalized responses to the customer’s specific queries. 

However, if a customer has deeper questions on how to change strategies now that their needs have changed and where to put their money moving forward, that becomes financial advice, and using AI to do that becomes tricky in the current circumstances.

Why is that?

So, let’s suppose AI analyzes the questions posed by the customer and recommends a revised risk portfolio for them to purchase. Who then takes responsibility for the financial advice provided? Who takes accountability? The answers to these questions are still evolving. 

Likewise in modeling if the outcomes are not explainable they are not tenable. 

The AI we have today isn’t at a level where it can support these deeper, riskier aspects. We’re in a stage where it’s prevalent, but still making basic coding and computing errors. So, we need to stay cautious.

Do you think AI can evolve to that in the future?

That is the goal! However, while it’s easy to create use cases for AI; the data, model, and governance around it needs to evolve to a much higher degree than what it is today.

What are some trends you’re predicting in this industry in the next few years?

First off, I think people will trust AI a lot more. As I said, even though AI is all the rage right now, it isn’t fully reliable. Down the line, as technology improves, people’s trust in using AI will also go up. 

This will lead to the widespread use of AI. I predict in the next 10-15 years, it might become just as commonplace at Paytm and UPI. 

I’m also looking forward to seeing what will happen with AI and Blockchain technologies coming together in the future! 

But before that improvement happens, what are some things companies need to be cautious of when it comes to AI?

Be sensible about what you input into Chat GPT. No customer data, or company-specific, personal information should go in there!

In a nutshell, AI can be leveraged to make Wealth Management more accessible to the masses, the experience more meaningful and data-driven, and eliminate human biases wherever possible. However, organizations, in their excitement to use AI, must still tread cautiously.