Rebooting the global asset management industry

14 Rebooting the global asset management industry Theme 3: Proof of Value Matters as Much as Proof of Concept Talking about a technology brimming with promise is one thing, adopting it is quite another, just when capital markets are buffeted by rising geopolitical risks. When asked about their perception of the progress made so far towards the adoption of AI and GenAI, the survey responses vary (Figure 1.3, left chart). Signs of leaders and aspiring leaders are there. But caution is the watchword. As for the nature of the changes now in progress in the way asset managers operate and serve their clients, the responses also vary (Figure 1.3, right chart). Major changes are envisaged. But incrementalism is the watchword. Being stewards of their clients’ money, asset managers have historically preferred ready-made tech solutions that deliver value within realistic timeframes, unlike unfamiliar technology, like AI and GenAI. Never before have humans created machines that operate in ways that humans don’t understand. Their complexity has held back the adoption pace, as per key data points in Section 3. These show that grafting AI andGenAI onto legacy customized IT platforms that have evolved piecemeal over time has proved hard due to the differences in their chronological age, according to 59%of the survey respondents. Additionally, the volume, velocity and variety of Big Data has been impressive but not their veracity (54%). Their use in complex algorithms has yet to earnmarket confidence, due to the risk of ‘hallucinations’ – inaccurate outputs that seem indistinguishable from true ones (49%). The algorithms’ self-learning capabilities are impressive in delivering actionable insights. But that flexibility alsomeans that they are a black box. Their outputs are exposed to legal and ethical risks (44%). That is reinforced by the familiar innovator’s dilemma (36%): while profit margins are good, the incentive to innovate is weak. Finally, the divergent regulation on AI andGenAI across the capital markets in different regions exposes asset managers to all manner of reputational risks (47%). Given these challenges, the adoption is led by very large survey respondents, with their superior resources. The rest are developing AI literacy, governance and security first, in the belief that AI and GenAI are the long game in value creation and efficiency gains. Asset managers have historically preferred ready-made tech solutions that deliver value within realistic timeframes, unlike unfamiliar technology, like AI and GenAI. Figure 1.3 Overall, how do you perceive your organization with regard to the adoption of AI and GenAI? What is the extent of the changes needed in the way asset managers operate and serve their clients currently? Source: Citi/CREATE-Research Survey 2025 A laggard A cautious follower A fast follower A leader Minor Incremental Radical 5 6 15 67 63 27 17 % of respondents % of respondents “GenAI is not turnkey plug-and-play technology. It requires big investments in core IT platforms and new skills.” “We will wait and learn how the early technology leaders fare before we take the plunge. Being small, we could be a fast follower.” Interview Quotes