Time to believe the hype? AI is here, but what does it mean for your alternatives business?

Artificial Intelligence (AI) was one of the hottest topics for alternatives managers in 2024, and I fully expect it to dominate discussions again this year.

No longer a buzzword, AI is starting to transform various processes via automation, changing aspects of alternative investment companies’ day-to-day lives. Tangible benefits are emerging, including the ability to get better insights from data sets, and enhance systems and processes, with clients able to log in and pull data to their own cloud from the Citco group of companies’ (Citco) platforms, for example, or use different AI-powered tools to organize and analyze their own data.

The technology behind this is only going to be further improved over the coming months and years as it self-learns, bringing further benefits to users. It is little wonder we are seeing increasing expectations from clients as a result – one recent poll Citco took showed 80% of clients expect their use and integration of AI to increase over the next year, with the automation of manual processes a hot topic.

However, it’s important to note that while AI can certainly enhance parts of the asset servicing industry, and already is in some areas, it needs to be tested rigorously and implemented in ways that bring real benefits.

The key to Citco’s approach with any AI development is to take a human + AI stance. What this means is that we are focused on introducing AI to enhance processes and enable a greater degree of straight through processing, reducing the need for human interaction, but not removing it. It is very much about “keeping the human in the loop”, augmenting how we work rather than changing it.

We also want to make sure you, our clients, understand how we are using it, and how you can make best use of the tools available. We have a variety of tools already, with others in production, but it is important to understand exactly how to make it work for your business – after all, none of our clients are identical, so everyone will have a different idea of where it can be integrated.

AI today – what is available?

There are a number of AI-enabled applications available that automate various tasks. These tools can help users to take more control over their data, whether it be how they store it, access it, analyse it, or share it with end investors. Below we explore some of the core tools in more detail:

Citco Document Intelligence™

This platform interprets, organizes and transforms documents into discoverable information and insights.

The holistic solution offers:

• Streamlined document management through a granular library;
• Automated document capture, information extraction and document indexing;
• The ability to mine richer and deeper data from investments;
• Discoverable structured data;
• Straight-through Processing (STP);
• Multiple delivery methods: API and client-facing UI.

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Citco Data Services

Our web-based data integration and reporting platform was launched in 2020 to help to transform client data into quality data that provides actionable insights to deliver measurable value.

The platform leverages a modern, cloud-based data source to curate and present data of disparate systems in a unified manner. A comprehensive data model with a defined data strategy for data storage, flows and output mechanisms - all underpinned by high-quality data - empowers alternative asset managers by making the data they need readily available, accurate, consistent, and meaningful. Citco will be introducing more technologies - or plugins - around Citco Data Services that further enhance and facilitate the flow of quality data.

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Using the tools above, alongside other technology, to enhance operations and reporting (as well as clients middle and back office functions) means businesses can dedicate more time to value-add tasks, and to achieving their own growth objectives.

As noted above, the development of AI is ongoing, so the current tools are only going to become more advanced over time, helping to further streamline many tasks across the spectrum of asset servicing. New tools will continue to be developed and introduced, offering further improvements in different fields within the alternatives landscape.

What does an AI future look like for alternatives asset servicing?

Over the coming years, we expect traditional methods of accessing information will be completely transformed. For example, instead of navigating manually to find specific data, clients will be able to simply type a query, such as "What was my P&L for equities in Fund One?" or "What were my capital calls for June in this fund?" and get the info delivered to them.

With the proper systems and processes in place, it will also cut down significantly on misinformation – for example, if you ask a machine to provide this information, you could program it so it gives you the most up-to-date P&L with the date it was last updated. This means no one in a manager’s operations team needs to go searching to double-check the information.

These developments have the potential to change how clients interact with administrators, making the process far more intuitive and efficient.

There will no doubt be setbacks as well as progress made in 2025 – that is the nature of innovation – and therefore it is important to distinguish between hype and reality. Citco will continue to focus on value add developments that deliver real benefits to you, our clients.