How do start-ups impact the digitisation of larger and more established financial services?

Lennart Asshoff, Chief Executive Officer, Exo Investing

Exo Investing wants to unlock private banking for everyone. In 2016 they launched the Exo platform in partnership with ETS, an asset management firm who’ve been managing billions for decades. Using ETS’ investment expertise and Exo’s nimble approach, they have created an AI wealth manager, available at a low, all-inclusive cost. Ahead of speaking at TechNOVA: AI in Financial Services, Lennart has shared with us how to implement AI in business without causing negative disruption, alongside his predictions on the impact of start-ups on the digitisation of established financial services.

AI has huge potential to transform back-office processes, making them more efficient and reducing costly mistakes – how can AI be introduced without causing negative disruption across a business?

AI is a technology a lot of people misunderstand, in my opinion. Algorithms are built by people, and the outcome of using AI is almost entirely reliant on the development and testing carried out in its building. The most popular headlines surrounding AI mostly centre on the thousands of jobs that AI will suddenly “take over”. This is hugely misleading since, in reality, AI is a solution to providing jobs that require less menial tasks and more fulfilment in roles that demand human reasoning. Customers will find products and services that can better serve their needs, and employees whose focus can be devoted to the consumer over data entry, for example. The mindset needs to see a shift in regards to AI; its impact can be incredibly positive and the funding many large businesses are funnelling into it should speak to its potential to benefit a lot of people. Disruption is only a real concern when AI hasn’t been stress-tested adequately or hasn’t been designed with clear goals on its function.  

“The mindset needs to see a shift in regards to AI; its impact can be incredibly positive…”

How do new technologies and start-ups impact the digitisation of larger and more established financial services?

The unprecedented growth of wealth management start-ups, who have embraced new technology has been fundamental to triggering the growing digitisation of the established players in finance. New startups aren’t weighed down with large legacy systems or historical data sets, enabling them to operate with un-matched agility compared to large banks. Last year, Lloyds attempted an online banking transfer of over 1 billion accounts and ended up locking all those customers out, accidentally debiting or crediting some of them and granting access to random accounts for others. It’s a difficult path to follow for companies of that size. In the modern market, the power of an established brand name won’t have the same impact on a consumer as a service from a young start-up which can benefit them more and potentially cost them less. The same applies to public image; the traditional financial world has struggled more to keep consumer trust after the events of the last decade. Adopting new technologies that improve accessibility, for example, indicates a progressive stance in established brands, which can only benefit their presence in the finance space. The technological angle has cemented itself as the direction many financial services are moving in. This week, IBM funded its AI program with $2 billion; that really tells you all you need to know about their priorities.

“In the modern market, the power of an established brand name won’t have the same impact on a consumer as a service from a young start-up which can benefit them more and potentially cost them less.”

How will AI and digitisation impact the wealth management industry?

AI and digitisation are tools which can allow the industry to evolve where, for the most part, wealth management hasn’t seen dramatic development compared to other similar sectors like payments, fundraising or lending. The pressure on these businesses from regulatory procedures and overheads are a part and parcel of the industry. The use of AI allows a more comprehensive and immersive experience for investors, but also allows a significant amount of streamlining, where advisors can devote a lot more time to customers, and a lot less time to crunching numbers. This is deeply in line with what the customer of today wants from their financial services, and there’s no sign of fintech slowing down, anytime soon.

“For the most part, wealth management hasn’t seen dramatic development compared to other similar sectors like payments, fundraising or lending.”

Lennart is the CEO and co-founder of Exo Investing. Prior to starting Exo, Lennart was working as a product manager at ETS, one of Europe’s largest quantitative asset management firms, involved in creating made-to-measure investment portfolios for institutional clients. Lennart is the driving force behind Exo and is leading the team to build a truly customer-centric investment solution. 

Lennart graduated with an MSc in Investment Management from Cass Business School in 2010 and is a CFA Charterholder.

Lennart will be speaking at TechNOVA: AI in Financial Services, taking place in London on 27 March 2019.

From banks to start-ups and insurers to investors, TechNOVA: AI in Financial Services will gather together the greatest minds to expand understandings of AI, and build practical knowledge on how to develop real, implementable systems. Don’t miss this fantastic opportunity to explore the everyday implications of AI, discover implementation how-to’s and learn how to adapt your AI strategy to the changing customer.