AI in Investment Management Global Insights | Business Advisory Services 1 Citi Business Advisory Services (BAS) has honed in on how the investment management industry is using Artificial Intelligence. More specifically we have looked at how Generative AI is being applied, use-cases being considered at this time, and how the future state may look. To that end, we have conducted over 40 interviews with C-suites of investment management firms, ranging from hedge funds and sovereign wealth funds to asset managers across different regions of the world, together with industry experts and FinTechs. In our discussions we saw a wide range of views from strong AI enthusiasts to those with a more skeptical point of view given the substantial challenges faced. Our conversations with FinTechs helped to provide insights on how well the demand and supply sides of (Gen)AI can come together to move the industry forward. We found that investment managers are taking a three-pronged approach to AI adoption. The majority are already focusing on AI-use to enhance operational efficiency and productivity by automating routine tasks and improving workflows. The second prong involves client-facing functions, where many are looking into generative AI-use in producing investment research and client communications (uniformly this was being considered only with human oversight). The third prong, representing future use cases dependent on further advances in AI technology, include the potential for GenAI use in alpha generation, investment copilots or in the automated creation and management of funds. It was clear that the opportunities accessible through greater use of AI in the investment management industry are substantial but come with significant challenges. Change management was cited as a top concern. Many interviewees highlighted culture change as a key challenge in increasing adoption of AI tools and solutions across their organizations. Another was the need to identify standardized protocols for data across different sources to build a robust framework from which to build upon. The general view from our conversations was that investment managers who are equipped with targeted and tested AI-enabled tools should be able to identify and capitalize on their competitive advantages, and better ensure their relevance in an ever-evolving and competitive industry ahead. Executive Summary Helen H Krause, CFA +44-20-7986-8653 helen.krause@citi.com Alex Miller +44-20-7986-7295 alex.miller@citi.com Savina Chahal +442079866751 savina.chahal@citi.com Lisa Finstrom +1-212-723-5891 lisa.finstrom@citi.com Adnan N Memon +44-20-7986-6739 adnan.memon@citi.com Yirou Yu +1-212-723-4131 yirou.yu@citi.com