Investors in Asia Pacific are keen to use artificial intelligence to enhance the performance of their investments, but availability of data is a key challenge in integrating the technology into their decision making, according to Elliott Shadforth, EY’s wealth and asset management sector leader for the region.
The consulting firm conducted a survey last year and found that around 71% of institutional investors in Asia Pacific consider AI to be “essential” for their long-term investment plans.
“This high rate reflects a strong belief in the potential of AI to enhance investment returns and growth,” Shadforth says in an interview with Asia Asset Management.
He says many investors plan to use AI to access investment opportunities as the technology expands into investment processes such as streamlining due diligence, processing capital calls and reviewing agreements.
Given that availability of data is a major concern in deploying AI – cited by 52% of respondents in the survey – investors are putting strong emphasis on talent management to complement greater focus on data analysis.
“They are heavily investing in building technical capabilities and expertise to leverage AI-driven analysis effectively,” Shadforth says.
According to Shadforth, data privacy, varying regulatory standards and the need for significant infrastructure investments are “unique challenges” faced by investors in Asia Pacific in adopting AI. Moreover, the survey indicates a “notable disconnect” in expectations.
It found that only 31% of investors are certain that their managers are using AI, and only 42% believe AI adoption should lead to lower fees.
“This suggests challenges in communicating the AI value proposition and managing return on investment expectations,” Shadforth says.
“Despite these challenges, Asia Pacific generally exhibits higher technology adoption rates compared to global averages, which is expected to assist in improving investment returns and asset growth,” he adds.
