Back Office Backup: AI’s Role in Reshaping Financial Services Administration

The American College of Financial Services
January 25, 2021

As with any emerging technology, the development of artificial intelligence and its application to wealth management will continue to offer opportunities, as well as pose challenges and dilemmas to the financial advisor. As we’ve explained in our previous blog post on robo-advisors, negotiating a balance between human input and AI calculation in services such as retirement planning, estate planning, financial planning, and life insurance can be a difficult one to strike and persists as a topic of discussion. What isn’t up for debate, however, is that AI offers massive potential advantages in an area where it is already being put to great use, including in the financial services industry: back office functions and support roles.

Back office tasks, while not client-facing, are no less important in making a financial planning firm work—and many of these can be streamlined and made more efficient with the help of AI systems. One type of AI, Robotic Process Automation (RPA), is already being adopted across professions and industries to help with routine jobs like bookkeeping, payroll, and new employee training. While it may still be necessary, as we’ve discussed, to have a human being around to check its work, AI systems can accomplish these mundane, repetitive tasks much quicker than humans can and are better at finding issues and pointing out inconsistencies in allocation of funds, among other things.



In the old days of financial services, complex processes like transactions and trades were made within offices and between businesses more or less by hand or word of mouth—therefore, they were much more likely to experience breakdowns in communication or information infrastructure that threatened the integrity of these processes, not to mention made them harder to locate and correct. With current AI systems, tracking down trade breaks and transaction errors is fast, easy, and above all, no longer detrimental to a firm’s budget. The automatic rerouting of transactions and flagging of problematic trades has been a game-changer for financial services companies and advisors everywhere. And this doesn’t even begin to cover the obvious advantages of using computers, rather than people, to sift through the enormous amounts of numbers and figures needed for financial planners today to make informed decisions when helping clients with portfolio decisions and long-term thinking.

AI interactions can also be used by human resources and communications managers to reach out to employees and potential clients alike. No doubt many of us have at some point used a website or service that automatically prompted us to answer a series of questions or asked for the question we needed the answer to in order to properly route the request to a human moderator: this is exactly the kind of tool AI can bring to financial services firms as well. Rather than taking up an HR employee’s valuable time with basic questions that can be easily resolved, active AI systems can guide other employees through learning and development pathways, as well as give them the tools to resolve their own problems. These “chatbots,” as they’re called in the trade, can both enhance learning outcomes for employees who use them and make HR functions far more cost-effective.



Financial services advice and consultations are also frequently confidential affairs: no investors want their financial information available to anyone who might misuse it, and client privacy must always be a firm’s top concern. AI can help in this arena, too, by enabling greater degrees of cybersecurity protection that can protect client data and stop fraud before it happens. Intelligent AI software can detect, in real time, efforts to infiltrate secure computer networks and deal with them in a fast, efficient manner that might take a human operator much more time—time your practice or firm doesn’t have. In addition, there are limitations to human pattern recognition that mean sometimes scams and fraud aren’t discovered until it’s too late. AI, being made of digital patterns itself, is much more adept at this kind of detection and can catch potential issues buried in mountains of irrelevant data faster than the human eye. This way, rather than needing to allocate budgets to expert investigators who comb through the endless, complex amounts of financial information, companies and financial professionals can delegate these issues to AI tools and be able to respond in a much more comprehensive and well-informed manner.


Finding Common-Sense Solutions in a High-Tech World


AI usage is increasing in nearly every sector of business, including financial wealth management, and while its merits as a client-facing tool are still a matter of debate, its functionality and usefulness as part of back office operations has been proven out time and time again. By harnessing the power, speed, and flexibility AI can bring to the table for a variety of administrative tasks, from HR and security to record-keeping and risk management, wealth managers have the chance to revolutionize their approach to business infrastructure and build an advising firm or practice that better serves potential clients, helping them reach their financial goals.

The knowledge and expertise you need to navigate this new landscape is here with your AI and Wealth Management resource center, including an in-depth white paper, an informative infographic, and audio interviews with fintech experts. Get instant access now.

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