Is AI really among us?
Five concrete advantages for asset managers

We are on the cusp of a major technological transformation. Artificial intelligence (AI), cybersecurity innovations and open banking are no longer just buzzwords or theoretical concepts, but concrete realities that are redefining the rules of the game. Nvidia, a company that is a key player in the global expansion of AI, is probably as much criticised as it is lauded. However, the fact that it entered the realm of the largest capitalisations a few weeks ago is a strong signal that these technologies are taking root in our economy.

Laurent Pellet Limited Partner & Global Head of EAM                                 Bank Lombard Odier & Co Ltd

Financial institutions must adapt to new technologies in order to remain competitive and face up to cyber risks. Although sophisticated, they are also accessible for external asset managers, enabling even the smallest structures to benefit from them.

Let's take a closer look at these new technologies, to better understand how they are reshaping different aspects of our profession.
 

1. Optimising information research

AI is revolutionising the way information is accessed and processed. Natural language processing technologies make it possible to quickly search for and analyse data on intranets or in large documents. For example, an EAM can use an intelligent chatbot to instantly access transaction histories or investment policies, reducing the time spent on administrative tasks.
 

2. Fraud detection and prevention

Fraud is a constant threat in the financial sector. AI's machine learning capabilities can analyse millions of transactions in real time to identify suspicious patterns. A concrete example is the use of sophisticated algorithms to detect anomalies in transactions, enabling fraud to be identified before it causes significant damage.
 

3. Improving cyber security

Cyber-attacks are becoming increasingly sophisticated, requiring equally advanced defences. AI-based systems can continuously monitor networks, identify anomalous behaviour and react in real time to neutralise threats. For example, we can use AI solutions to rapidly detect and block hacking attempts, protecting sensitive customer data.
 

4. Facilitating open banking

Open banking allows customers to share their financial data with third parties via secure APIs (Application Programming Interfaces). EAMs can thus access a more complete overview of their clients’ assets, providing more personalised and accurate advice. The Federal Council recently welcomed the progress made by open finance players in Switzerland. On 19 June 2024, the Federal Department of Finance (FDF) informed the Council of significant developments, in particular the multibanking initiative, launched in May 2023, which saw some 40 banks commit to offering integrated access to data on private accounts, savings accounts and current accounts. This initiative demonstrates the Swiss banking industry's commitment to open finance, although further efforts are needed to fully achieve the goals set by the Federal Council.
 

5. Data security and supervision of new technologies

When using open banking, particular attention must be paid to data security. Advanced cryptographic technologies and robust security protocols are essential to ensure that shared information remains protected from unauthorised access. In addition, it is crucial to supervise the use of new technologies to avoid uncontrolled use. EAMs can start with relatively simple use cases, such as AI for document translation or the analysis of large documents, and progress gradually while ensuring that copyright and intellectual property are protected.
 

Although new technologies may initially seem complex, they are becoming increasingly accessible, including for external asset managers. By adopting a gradual approach and supervising their use, they can free up time to concentrate on complex, high value-added subjects. Technology excels at factual analysis, allowing advisers to focus on qualitative aspects, where expertise, experience and emotion are irreplaceable.

The harmonious integration of people and technology is the key to maximising the benefits of this digital revolution. This is no longer music to the ears of the future, but a concrete reality that is already transforming the sector.

Biography

Laurent Pellet joined Lombard Odier in June 2017, and assumed responsibility for the Group’s External Asset Managers department in 2018.

His career began with Ferrier Lullin, where he held various positions for more than 15 years, including Head of Credit and Risk, and subsequently Head of the External Asset Managers department in 1997. In 2006, he joined Julius Baer to lead their External Asset Managers business for the French-speaking part of Switzerland and Western Europe. In 2012, his responsibilities were extended to cover Monaco and the Middle East.

Laurent Pellet holds a Federal Diploma (school leaving certificate) from the Ecole Supérieure de Commerce de Genève. He is a graduate in Credit and Risk Management from the University of Geneva, and in Quantitative Portfolio Management from HEC Geneva. He also holds a Diploma in Digital Finance Law from the Faculty of Law of the University of Geneva and the ‘International Certificate of Private Banking and Wealth Management Retreat’ from the Swiss Finance Institute. He is a Certified Wealth Management Advisor (CWMA).