In a world where technology is deeply intertwined with our lives, Subomi Plumptre, a licensed fund manager and co-founder of Volition Cap, is on a mission to grow the wealth of Africans and Diasporans. As the sun sets over the digital metropolis, Bayo, a young associate from an African consulting firm, discovers a new artificial intelligence (AI) platform called ChatGPT. Desperate to save himself from the sinking pit of his financial woes, Bayo wonders if this viral creation can untangle his predicament. At 32, Bayo has toiled for a decade, yet found no solid ground in savings. Seeking guidance amidst the chaos, he turns to ChatGPT for a manageable investment plan.
The answer ChatGPT provides is peculiar but intriguing, highlighting the evolving relationship between humans and artificial intelligence. AI has infiltrated the public consciousness, providing a semblance of intelligent behavior and human-like insight to programming inquiries. Tracing its roots back to the 1980s, the impact of AI on society has grown exponentially. As users interact with AI and rate the quality of responses they receive, the technology improves through a process called machine learning.
In the neon glow of the digital landscape, discussions around AI’s potential to upend industries have surged. One area of significant disruption is security on a global scale, as exemplified by the emergence of the Kargu-2, an autonomous attack drone that allegedly uses machine learning, in 2020. As AI continues to establish a foothold in various sectors, the financial services industry and the realm of asset management may be next in line for transformation.
Turning our gaze to the African continent, an optimistic adoption of AI has seeped into the financial services sector, with a primary focus on front-end banking processes, such as customer authentication and virtual assistance. African banks, like South Africa’s Nedbank and Nigeria’s Zenith Bank, have embraced this shift, launching their Enbi chatbot assistant and ZiVA (Zenith Intelligent Virtual Assistant) in 2022 and 2021, respectively. In this cybernetic vision of the future, the role of AI in asset management has diversified into investment research, portfolio management, and investment advisory.
AI-generated investment advice is currently reviewed by licensed fund managers before it reaches the client. However, as financial institutions continue to push the envelope with AI technology, it’s possible the role of these human reviewers may become obsolete. This possibility parallels the existential questions faced in fields like medicine – will doctors be edged out by AI as it becomes increasingly adept at handling large data sets and diagnosing diseases?
For African asset managers pondering an AI strategy, consider the following four insights: First, take into account the competitive landscape involving boutique asset management firms. AI enables smaller firms to quickly onboard clients through know-your-customer (KYC) software and deploy low-cost “robo-advisors” for customized investment solutions. The use of cloud-based services further accelerates the technology’s scalability.
To kick-start the implementation of AI-powered KYC software, explore third-party commercial vendor application program interfaces (APIs) tailored to your business needs. These APIs can be seamlessly integrated into your existing company websites to gather and verify customer identity or residential information.
Second, tap into your data sets for valuable insights. AI and machine learning thrive on continuous improvement, and asset management firms often possess an abundance of customer data due to regulatory requirements. By harnessing this data, sub-Saharan companies can help address the current AI bias that favors Western data sets and underrepresents African demographics.
To build significant financial data sets suitable for AI applications, start by ensuring your company’s data privacy policy allows for the use of anonymized data. Then, integrate AI analytics software capable of sorting, categorizing, analyzing, and storing customer information.
Third, address AI’s inherent bias. While AI emulates human intelligence, it also reproduces certain prejudices. The lack of African data in AI means there’s an urgent need to fine-tune the technology to better suit African socio-cultural contexts. African asset managers have the potential to fund research and advocacy aimed at mitigating these biases and providing a more enriching customer experience.
If you’re interested in supporting the creation of AI platforms that accurately represent African demographics, consider funding independent nonprofits, universities, or partnering with African multilateral institutions, such as the African Union, to promote open-source data.
Fourth, look to the future with gamification and tokenization. The evolution of finance through robo-advisors and tokenization has transformed the perception of investing, making it more enjoyable for novice investors. By adopting AI to develop financial gamification platforms, asset managers can captivate their audience and stimulate customer loyalty.
Successful gamification typically includes involving behavior scientists in product development teams from the outset, ensuring the creation of engaging and addictive experiences.
In a world where AI’s influence is undeniable, its capacity to disrupt and empower the African asset management industry is a double-edged sword. Will AI endanger the role of asset managers, or breathe new life into it? The endgame may yet elude us.
As Stijn (Stan) Christiaens, co-founder of Collibra, once said: ‘If I can only give one answer to the question of who will be the last to be disrupted by AI, it would be Strategic Consulting.’ If this prediction holds true, then fund managers acting as strategic financial consultants in a heavily regulated industry may just be one of the final bastions standing against the relentless tide of AI disruption.
