Goodbye Customer support agents - AI is here

Greetings!

Welcome to The Menu Magic - Finance & AI newsletter

Every week, we will deliver expert insights, in-depth analysis, and curated content to your inbox, helping you navigate the rapidly evolving landscape of AI in finance.

In today’s email:

• Goodbye Customer Support agents - This AI tool will change the contact center industry

• Asset management shake up - Personalization

• The advantage of Fintech compared to traditional banks

Hey there,

Hope this week is treating you well! I've got some exciting news to share on the AI front that's been making waves in the financial industry. Grab a cup of coffee, sit back, and let's dive into it.

Meet Air, a game-changing innovation that is reshaping how we understand and implement AI in customer service. You might want to bid adieu to your regular customer service agents, as this AI-powered tool is all set to revolutionize the contact center industry!

Imagine having the power to conduct 5 to 40-minute long customer service calls that sound utterly human, except, they're not. This is what Air is bringing to the table. It can autonomously perform actions across an astonishing 5,000 unique applications. You know that scene from your favorite sci-fi movie where they have AI bots taking over human jobs? Well, it's not science fiction anymore!

It's like having a whole army of 100,000 sales & customer service reps ready at your command. Just a simple click, and there you have your team, working tirelessly 24/7, handling your customer calls and sales pitches. Setting it up is as simple as starting a Facebook ad, and you'll have it on live calls in minutes.

And no, this isn't just another hyped-up tech demo that fizzles out in the real world. Air is currently engaged in live calls, interacting with real people, and delivering tangible, profitable results for actual businesses. It's been tested and proven, and the results are nothing short of groundbreaking.

But here's the fun part: Air isn't restricted to a specific use case. Its applications are as wide and varied as your creativity can stretch. Whether it's acting as a Sales Development Rep, a round-the-clock customer service agent, a Closer, an Account Executive, or even donning the cap of a therapist or philosopher, Air can do it all.

The possibilities are virtually limitless, and the potential impact on the financial industry is massive. From cutting down on operational costs to drastically improving customer service efficiency, Air is paving the way for a new era in customer service.

Imagine making a call to your bank, and instead of being put on hold, an intelligent AI, almost indistinguishable from a human, picks up instantly. And it's not just about speed. These AI tools will be prepared to answer almost everything - from the simplest query about your account balance to more complex ones about loan interests or insurance premiums. Even better, they'll do this 24/7, providing support and service at all hours of the day or night, even on holidays.

This could truly transform not only the user experience but also the operational efficiency of these institutions. The banks and insurance companies will save tremendously on customer service expenses and can utilize those resources to further improve their services and offerings. It's a win-win situation for both the customer and the service provider.

So, the next time you pick up the phone to call your bank, don't be surprised if it's an AI on the other end of the line.

Asset management shake up

Hey there,

I've been digging into the current state of the asset management industry and let me tell you, it's going through quite the shakeup. Recent events have been a wake-up call, pushing us to reevaluate the business models that we've held onto for so long.

For nearly two decades, market performance was the golden goose, accounting for 90% of the industry’s revenue growth. But 2022 came along with rapidly rising interest rates, leading to a plunge in both stock and bond values. This led to the second-largest single-year decrease in global assets under management (AuM) since 2005, a drop of $10 trillion, or 10%, to around $98 trillion—eerily similar to 2020 levels.

The central banks have shifted their policy from engineering market appreciation to slowing growth to tackle inflation. Market growth isn't the golden goose anymore. Additionally, low-fee passively managed funds have been thriving, especially in the US, and this trend is expected to expand in Europe. Add to this, increasing cost pressures and the struggle of new product innovation to compete with well-established funds, and you have a perfect storm.

So, what's the game plan now? Change. It's the only viable choice.

To bounce back to the profitable growth levels of yesteryears, asset managers will need to rehaul their strategies. A 20% cost cut is necessary, alongside a shift in the revenue mix to generate at least 30% of their revenue from higher-margin products.

In BCG’s 21st annual global asset management report, three themes were highlighted that should shape future strategies: Profitability, Private Markets, and Personalization – the 'Three Ps'.

Firstly, profitability is crucial. This isn't about making indiscriminate cost cuts, but optimizing costs, and making informed decisions about the key cost drivers. Firms should look to flatten organization structures, streamline support functions, and trim away unprofitable products to refocus the business on value creation.

Secondly, there's great potential in high-growth alternative investments and private markets. These bright spots represented more than $20 trillion of global AuM as of the end of 2022 and accounted for half of the industry’s global revenues. For firms looking to tap into the alternatives market, there are four main pathways: build in-house, buy multiple firms, buy an alternatives firm, or establish partnerships. The success of these ventures largely hinges on the execution strategy and alignment of strategic interests.

Finally, personalization is the future. Asset managers need to harness technology to deliver personalized client experiences and products. Direct indexing is one such personalization product gaining popularity in the US, enabling clients to build individualized portfolios. There are risks involved, but with the right strategy – partnering with a vendor, building in-house capabilities, or acquiring an existing player – there are considerable opportunities.

In a nutshell, the asset management industry is facing some challenging times, but by adopting a transformative mindset and focusing on the 'Three Ps', there are excellent prospects for growth. It's about being agile, adaptable, and forward-thinking in this volatile economic climate.

You can read more about personalization in the Boston Consulting Group report here.

Stay tuned for next week's insights. Until then, keep growing and innovating!

Meme of the week

I'd love to hear your feedback on today's newsletter! Is there a specific type of content you'd like to see more of in the future? Since I'll be releasing a new edition each week, I welcome any suggestions or requests you may have. Looking forward to hearing your thoughts!

The Menu Magic is written by Francisco Cordoba, a Fintech entrepreneur living in London.

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