Visitors check out a slimmed down version of the IBM Watson supercomputer at the CeBIT technology trade fair on March 2 2011 in Hanover Germany

Visitors check out a slimmed down version of the IBM Watson supercomputer at the CeBIT technology trade fair on March 2, 2011 in Hanover, Germany.

Reshaping Wealth Management through Cognitive Computing

Cognitive systems will transform how organizations think, act and operate in the future.

In today’s economy, wealth managers face a whole new set of challenges related to the unprecedented overload of information in our digital age.

Each day we create 2.5 quintillion bytes of data – from financial reports and filings to images and social media updates – and with it grows the challenge of finding the truly meaningful insights that can pave the way to successful returns. 

The secret to success is something IBM calls cognitive computing, and it is about to transform how wealth managers interact with high volumes of diverse financial data.  Unlike traditional systems or research databases, cognitive computing systems like IBM’s Watson are able to understand natural language, quickly analyze massive amounts of data in seconds, and arrive at a reasoned, evidence-based recommendation. We are putting Watson to work with clients across various industries, including financial services where DBS Bank in Singapore is utilizing cognitive computing to assist relationship managers in providing more personalized advice.

DBS Bank is an example of putting to use the blend of cognitive computing and human interaction to derive actionable insights. This marriage is delivering best-in-class insights and advisory services that is real, personable, and actionable for their clients.

For example, a wealth manager can investigate the topics which are most relevant to share with a client given their recent liquidity event and portfolio holdings. The wealth manager will interact with the system getting answers to questions posed in natural language - such as "what are the bull opinions on a particular stock?" - collecting facts in seconds to be ready with series of recommendations, each with a confidence score and backed by supporting evidence. Behind the scenes, the system is able to analyze millions of reports and news items, identifying connections to a specific client’s needs and helping advisors weigh the various financial options available for each individual client. 

There are three opportunities ahead for cognitive computing to transform the wealth management industry:  restore and reinforce trusted client relationships; empower clients and relationship managers to make smarter financial decisions; and, provide consistent and differentiated advice to customers.


Restore and Reinforce Trusted Client Relationships

Following the financial crisis, restoring a trusted client relationship is a top priority for wealth managers. Clients want quality financial advice that is personalized and evidence-based from someone they can trust and have confidence in. In order to build that trust and confidence, advisors should not only focus on the recommendation, but the evidence, facts and rationale behind that recommendation. Clients care more about the reasoning and factoids presented to them and as such, fact-based dialogs will instill trust. Cognitive systems are evidence-based by design because all answers are presented and supported with the facts. Advisors can then, in turn, use these facts to ultimately present their clients with the soundest financial counsel.    


Empower Clients and Relationship Managers to Make Smarter Financial Decisions

In an age of information overload, wealth management firms need to master the use of this information by empowering their clients and advisors to discover actionable insights; insights that will lead to smarter business decisions. Most existing computing systems are deterministic. In contrast, cognitive computing is a probabilistic system which can surface data points one may not be aware of and open the scope of possibilities.  The ability to generate new perspectives allows for the process of discovery and variant perspectives and ultimately, augments the wealth manager’s ability to provide differentiated advice. The business of providing financial advice is a much better fit for a probabilistic system and not a deterministic system. In the case of DBS, they now have the ability to dissect hundreds of reports, product worksheets, and investment advisory documents and pinpoint the best advice possible for their clients based on their investment profile which was unthinkable before. This required a collaboration involving both technology and subject matter expertise to come up with a service that addresses information overload, that facilitates peer learning, and builds up collective knowledge. Good financial advice takes into account an individual’s situation and personal scenarios evaluated within a context of probability and fit.  Cognitive computing will thus augment the human element of wealth management and empower relationship managers to provide differentiated financial advice that enables smarter decisions. 


Deliver Consistent and Differentiated Advice to Customers

Consistency as well as differentiation in advisory services is also critical.  How can wealth management firms create a differentiated model that captures fast growing markets in a cost effective and compliant way?  A strategy that focuses on hiring or ramping up the number of client advisors is not scalable and may lead to a lack of consistency. To ensure that brand and advisory services are consistently represented across geographies, wealth management firms need to not only become more client focused but also to define, and above all establish, a minimum level of service that every client will receive, regardless of region.  Cognitive computing systems can help wealth management firms’ scale by becoming a crucial aide to their client advisors in building and fostering strong trust-based relationships. This will help wealth managers convert clients into advocates, not only for the client advisor, but also for the broader wealth management firm. 

Cognitive systems will transform how organizations think, act and operate in the future. By learning through interactions, cognitive computing delivers evidence-based responses that drive better outcomes. For wealth managers, this means being able to improve the advice and experience delivered to customers. For clients, this means a personalized experience that recognizes each client's discrete situation, personal history, individual risk profile and distinctive goals.  With cognitive computing, the possibilities are endless and forward thinking wealth managers that embrace such ideas will surely have an edge over others in the recent future.



Based in New York, Jean-Philippe Desbiolles is a Global Transformation Partner in IBM Watson’s Banking & Financial Markets group. Francesco Brenna is an Associate Partner and leads Watson in the Banking & Financial Markets sector of IBM Global Business Services (GBS) in Europe.

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.