Wealth creation through AI: A new breed of tech businesses transforming financial sector

By Tanvir Gill

Artificial Intelligence is en vogue, and yet, meaningful applications are only now emerging from the vast amount of hype that surrounds machine learning.

The real value of AI lies in scaling up user experiences while ensuring they remain personalised and rewarding. This is particularly relevant for financial services where clients demand high quality service, tailored advice and best execution.


No wonder, large financial institutions are excited about AI and keen to explore its potential in data collection, analysis, process automation and personalisation.

Big possibility brings in even bigger challenges, and many banks, brokerages and wealth managers are simply not geared towards building cutting-edge technology and managing its implementation. Top developer talent in AI is tough to find and retain. And current development cycles are too long for fast moving financial markets.

Banks and brokerages have traditionally seen themselves as financial, not technology companies. And yet, finance is rapidly becoming a technology business. Indeed, Lloyd Blankfein is on record stating that Goldman Sachs is a “technology company” and other senior industry leaders have been making similar noises. The race is now on to adapt to this new landscape in order to improve profitability and position for future growth.

So, it comes as no surprise that financial institutions are looking to partner with innovative fintech startups in order to leverage the power of AI and other innovative technologies. The new industry mantra is “collaborate to accumulate”.

One such startup is Arkera. Founded in 2015 and based in London and NYC, the company uses AI and deep learning to enable financial institutions to acquire new clients, stop client attrition and raise their activity levels. Their leadership team is ex-DE Shaw, Citadel, Goldman Sachs and Google.

(Team Arkera)

They introduced a “showcase” app recently in the US and UK app store, allowing investors to discover new and exciting investment opportunities in Exchange Traded Fund (ETF) products. Arkera analyses more than 100,000 articles daily, uses NLP technologies to contextualise them and connect them with 2,000 different ETFs, a process that would be impossible for any human to carry out.

Arkera co-CEO Vinit Sahni emphasises the importance of storytelling. Sahni says: “Self-directed investors buy into stories. They prefer to look at big ideas, narratives and news rather than bottom-up fundamentals. We help our institutional clients tap into that in order to drive growth.”

So, what does storytelling have to do with AI? Sahni explains, “AI can process huge amount of data, and when you inject financial domain knowledge into this process, you can empower self-directed investors to make exciting investment decisions by connecting personalised content to investment products in a way that’s automated and therefore scalable.”

This kind of automation is the holy grail for financial institutions since it enables them to scale distribution in a way that was previously impossible. And it works particularly well for ETFs and other mass market financial products. Combined with “personalisation” using Arkera’s proprietary deep learning technologies and a sophisticated recommendation model, the user experience mimics that of Spotify, Netflix and Amazon, making it very difficult for self-directed investors to walk away.

ETFs are great for retail investors because they’re low cost and transparent. But they’re also complex. They require deeper analysis than stocks and FX, and the choice facing self-directed investors is overwhelming.

Since this rapidly growing asset class already plays host to issuance of over $5 trillion, it’s challenging for advisors to keep abreast of developments and update their clients. By automating this stage of the buying funnel, wealth managers free up resources and enable their advisors to spend more time with transactional clients.

Arkera is starting with ETFs, but there is no reason why this approach can’t be extended to other products and asset classes. As Sahni explains, “We’re starting with ETFs because they’re the perfect retail product and we think we can improve the way they’re distributed for wealth managers and their clients. But we believe our approach has applications across asset classes.”

Clearly, others agree. Seeking to fuel its growth, the company recently closed a £4 million funding round, with XTX Markets and Alan Howard leading the investment and other participants, including DoCoMo Digital and Henry Ritchotte, ex-Deutsche Bank COO.

This is part of a wider trend towards industry veterans and incumbents backing innovative fintech startups. Collaboration is powering the next phase of growth in financial markets.

(Tanvir Gill is Senior News Editor of ETNow)