According to Mohamed El-Erian, the president of Queens’ College at Cambridge, generative artificial intelligence (AI) technologies will have a profound impact on asset management, causing both disruption and growth. El-Erian, in a recent op-ed for the Financial Times, describes generative AI as a highly disruptive innovation that is still in its early stages.
Generative AI refers to machine learning technologies like OpenAI’s ChatGPT and Google’s Gemini, which are capable of generating text, audio, images, video, and code. While these technologies are being used experimentally in asset management, their adoption is limited due to the rapid development of AI and the diverse nature of asset management itself.
In a report published by Boston Consulting Group in June 2023, five key impacts of generative AI on asset management were identified: improved operating efficiency, personalized services on a large scale, compounding knowledge, accelerated research, and the democratization of code.
El-Erian suggests that asset management is becoming a natural testing ground for generative AI technologies, with firms of various sizes experimenting with different AI solutions to determine their effectiveness. As trends start to emerge, those firms that can iterate and adapt quickly are likely to gain a competitive advantage. El-Erian warns that those who fall behind in understanding the capabilities of generative AI will find it increasingly difficult to catch up.
In related news, Microsoft has announced plans to invest 3 billion euros into AI development in Germany.