Insights from The 2019 Family Wealth Alliance WealthTech Symposium Part 2: How Family Office Firms Benefit From Andvanced Technology
At The 2019 Family Wealth Alliance WealthTech Symposium, I was asked to provide my insights on the future of WealthTech and ten years of experience using advanced technology that enhances the human touch of professional family office services. This is part two of our series sharing our perspective on the questions posed at the event. If you missed part one, you can find it here
We hear a lot about AI, Blockchain, Robotics Automation, how can these tools help family office firms – what applications benefit from these analytics?
The highest impact of these technologies is felt when they are fully integrated. Together, the combination of Blockchain, Robotics Automation, and AI can be a powerful toolset, opening the door to outcomes we’ve never been able to accomplish before. Each of these technologies is a different asset class; it’s easier to understand them by focusing on the different business outcomes they produce.
Blockchain is used to preserve a single persistent record of the truth in the presence of a chaotic volume of information. Consider that blockchain does to information what soil does to a seed. Until seeds are put in soil, they will not sprout, grow and produce fruit. When information and activities are conducted inside a blockchain infrastructure they produce knowledge. Blockchain is an infrastructure technology that enables business teams to achieve goals that were previously unthinkable without a single-source of truth system of records.
Robotic automation increases the efficiency of rule-based processes and oftentimes has an AI component to it. Automated Credit card fraud processing is a great example. When an abnormality in your spending is detected, you automatically receive a text or call. If you respond yes, I made this charge, then the abnormality is resolved without any customer service person being involved. If you respond no, then your account is automatically suspended, and the abnormality is routed to a customer service person. AI detects the abnormality and Robotics automation makes the resolution more efficient. Implementing automation inside a blockchain infrastructure is a powerful way to increase fiduciary controls, efficiency, and effectiveness around repeatable rule-based processes.
Artificial intelligence is best for high volume filtering of data to provide a quick reliable result. Here’s an example that we could all relate to. If you are at a beach full of white sand and asked to find one grain of green sand, you likely would not want that job. While your human eye can detect the difference between white and green, you would have to do it one handful at a time. AI is perfect for this job. It can be programmed to detect the color difference and scan all of the sand at one time to find the one green grain quickly. Robo Advisors scan the whole market and give non-human investment advice. To take advantage of AI, your office’s data must be structured. For family offices, a blockchain infrastructure is the best way to consistently structure complex data to take advantage of AI solutions.
Why We Need To Embrace Tech
We shouldn’t be apprehensive about adopting these technologies. Overall, they alleviate the tedium so that people can focus on what is important. In the foreseeable future, they won’t replace human creativity or experience, but they do advance human creativity to new levels. The complexity of our business is not decreasing and the needs of our clients are only increasing. The question for the family office is: will you address this trend proactively or adopt a reactive posture?