Despite the growing size of the global investment management industry, recent findings point to the continued elusiveness of revenue growth and profit margin expansion.

However, the potential of artificial intelligence (AI) to drive revenue growth is becoming increasingly apparent.

A new investment management perspective from Deloitte has shown that while integrating AI for process efficiency improvements may be common across the industry, research into how these capabilities can be deployed to drive sales and distribution is expected to gain momentum in the coming year. year.

According to Deloitte, some investment managers are already seizing the opportunity, with Amundi, Wealthfront and Vanguard developing their own AI-based tools to support personalized portfolio recommendations based on clients' specific risk tolerances.

"These AI-powered tools are designed to analyze data from client interactions to gain real-time insights at both the macro and micro levels of the investment managers' client base," the company wrote.

"Equipped with this level of granularity for their clients' current needs, sales teams can more effectively tailor specific fund recommendations."

Meanwhile, other businesses are beginning to use generative AI to develop personalized marketing strategies for existing and prospective customers.

This comes as 60% of investment management firms surveyed use AI in their data dissemination businesses to a "modest" degree, while only 11% describe use as "heavy".

This is despite an increase in use cases.

However, Deloitte believes that in 2025 the use of AI in distribution initiatives is expected to expand to both “modest” and “heavy” degrees as the potential benefits for revenue growth become clearer to the investment management industry.

The promise of industry disruption exceeds expectations

This year, Deloitte highlighted that AI technologies are seen as a potential disruptive force in the investment management sector.

"It now appears that the promise has exceeded expectations," the company said.

At the same time, companies now face the hurdle of deploying AI solutions at scale without previous models to guide them.

As such, it is increasingly critical for investment managers to be vigilant when integrating such technologies, according to Deloitte.

"Those who lag behind in realizing efficiency or identifying ways to drive innovation may find it challenging to remain competitive in 2025, as efficiency in investment management operations is not only a margin enhancer, but can also so it has the potential to drive alpha,” the report said.

"Significant transformation still looms on the horizon."