Rebooting the global asset management industry

Rebooting the global asset management industry 13 Theme 2: Small Steps, Not Giant Leaps, Mark the Rise of AI andGenAI For all their revolutionary potential, AI and GenAI have yet to reach the level of adoption that could visibly disrupt asset managers’ operating models covering the core processes in their value chain, as well as the information systems and talent pools that support them. But the wheels of change have started to turn in earnest. With AI, 41% are currently in the implementation phase and 5% in the maturity phase. The respective figures for GenAI are 26% and 3% (Figure 1.2). The current adoption is not a passing hype cycle but marks the early stage. That of AI ismore advanced because it has been around longer to provide predictive analytics and natural language processing. GenAI, the latest iteration, goesmuch further. It creates text, credible synthetic data, images andmodels based on existing data. Like cloud computing, it is not just an efficiency- enhancing technology. But, like the internet, it is a transformative heartland tool with the potential to disrupt every key activity in the investment value chain notable for its extreme information intensity. With a seemingly endless array of promising use cases, GenAI has the potential to also be a big value generator. Itsmachine learning conversational algorithms and neural networks can disrupt activities as diverse as investing at one end to client onboarding at the other. As data points in Section 3 show, 64%of our survey respondents single out alpha generation – the key value driver of the business – as being ripe for disruption. At least two in every five respondents also single out other candidates such as back office processes (62%), IT (54%), sales &marketing (51%), personalized client experience at scale (50%), riskmanagement & compliance (49%), personalized portfolios at scale (46%) andD2C access (44%). The rise of AI and GenAI is enabled by strong structural tailwinds from two sources. One is the rise of hyperscale players creating a winner- takes-all dynamic, forcing small and medium- sized asset managers to up their game. The other is the biggest wealth transfer in history, creating a self-directed mass affluent investor used to high levels of tech-enabled engagement and the hyperpersonalization that AI and GenAI are uniquely suited for. Such investors also prefer bespoke separately managed accounts (SMAs) – a tax-efficient device that reflects investors’ goals, risk tolerances and personal values in voting at the AGM of the investee companies. The current adoption is not a passing hype cycle but marks the early stage. Figure 1.2 Inwhich stage of the adoption cycle is your organization currently with respect to AI and GenAI? Source: Citi/CREATE-Research Survey 2025 Awareness raising Close to decision making Currently implementing Mature already Awareness raising Close to decision making Currently implementing Mature already 5 3 33 AI GenAI 51 21 20 41 26 % of respondents % of respondents “Our advance into the digital future will come in modest steps, not giant leaps. The question is ‘when’, not ‘if’.” “Our GenAI’s highest-impact use case is alpha generation by inventing synthetic data on counterfactuals used in scenario planning.” Interview Quotes