- This article explains why artificial intelligence (AI) is projected to be one of the most transformative technologies for asset managers, based on data from the II Annual Report of the Asset Securitization Sector 2024-2025, developed by FlexFunds in collaboration with Funds Society.
- It is tailored for asset managers and investment advisors interested in understanding the main advantages of artificial intelligence applications within the financial industry.
- At FlexFunds, we provide asset securitization solutions for issuing exchange-traded products (ETPs), helping firms raise capital across international markets. For more information, please reach out to our team of experts.
The investment field is undergoing a profound transformation with the rise of new technologies such as blockchain, big data, and, predominantly, artificial intelligence (AI).
Artificial intelligence, though still in its early stages, is revolutionizing the daily work of asset managers by offering a broad range of advanced tools for data analysis and decision-making. The overarching goal is to minimize risks and maximize returns over various time horizons.
In fact, the II Annual Report of the Asset Securitization Sector 2024-2025 provides insightful statistics about artificial intelligence applications in asset management.
A technology with great potential
The survey results, which involved specialists from 100 financial firms across 18 countries, reveal that a significant portion of the market trusts the potential of artificial intelligence.
Notably, 82.5% of respondents believe that AI can enhance investment decision-making by delivering more accurate insights and analyses to adjust strategies quickly.
Only 10% of respondents did not believe that this technology would make them more efficient and productive, and the remaining 7.5% were unsure of the advantages AI could offer for their specific activities.
Several reasons account for artificial intelligence’s usefulness to asset managers in the realm of investment analysis:
- Access to large data sets: AI can process vast amounts of data quickly and efficiently, enabling managers to identify patterns and trends that may be challenging to detect manually.
- Predictive analysis: AI can also be used to develop predictive models, helping portfolio managers anticipate future market movements.
- Task automation: AI can automate repetitive tasks, such as financial report analysis, freeing advisors to focus on more strategic activities.
That said, it is important to point out that AI is not a “magic solution” for investment analysis, as asset managers still need a solid understanding of financial markets and a clear grasp of their clients’ investment goals
“AI can aid asset managers in making better decisions, but it should not replace human judgment. Additionally, it facilitates portfolio customization for individual investors, adjusting to their preferences and risk tolerance,” added the experts behind the report.
The current state of artificial intelligence
Despite its significant benefits for asset managers, artificial intelligence is not yet widely adopted.
Specifically, the II Annual Report of the Asset Securitization Sector 2024-2025 noted that only 18% of the surveyed firms have implemented some form of AI in their operations, while 59% have not, and the remaining 23% chose not to respond to this question.
Of the companies that have implemented AI, 12% use it for advisory purposes, 3% to enhance anti-money laundering operations, and another 3% for investment analysis and optimization of processes and research.
Artificial intelligence is primarily utilized by asset managers to improve efficiency and decision-making.
It is also broadly applied in robo-advisors, which enable the construction and management of diversified portfolios automatically, rebalancing them periodically based on market conditions and investors’ financial objectives, all at a low cost.
Consequently, advisors and asset managers must offer superior returns or personalized services that algorithms cannot easily replicate to attract and retain clients, posing a clear challenge to the “human side” of the financial industry.
The II Annual Report of the Asset Securitization Sector 2024-2025 can be downloaded easily and for free.
