UBS-Amazon partnership: A glimpse of wealth management’s future

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Could UBS clients soon be serviced by voice-controlled AI?

Maybe not yet, but a new pilot program between the bank and Amazon's Alexa service is testing the frontiers of both science fiction and wealth management.

UBS' partnership with Amazon will enable clients and non-clients of the bank to get answers to financial and economic questions, ranging from what is inflation to how the U.S. economy is faring.

It's the latest example of how wealth management firms are experimenting with new technologies such as data analytics and artificial intelligence to expand or reinvent the business. Bank of America Merrill Lynch recently unveiled "Erica," a virtual assistant to be integrated next year into the company's mobile banking app. The AI-powered program will analyze clients' accounts, answer their questions and may even anticipate their financial needs, according to the bank.

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Many firms have also been unveiling plans to roll out robo advisers and other automated investing services. Earlier this year, UBS struck a deal with technology developer SigFig to create digital advice tools for its roughly 7,100 U.S.-based advisers.

Lex Sokolin, Autonomous Research's global director of fintech research, says that these and other moves indicate how large financial institutions are better preparing themselves for how technology can and is rapidly changing the business.

"The holy grail of a chatbot or virtual assistant is to help you adjust your behavior, telling you when to save more or spend in order to reach certain goals," Sokolin says. "I think if you look out a few years from today, it's not that far from budgeting and personal financial management to full financial planning."

Amazon bills Alexa as the "brain" that powers its Echo and Echo Dot devices, voice-controlled speakers. Users can ask Alexa a number of questions or requests, from, "What's the weather today?" to "Play NPR." Responding in a woman's voice, Alexa gives immediate answers. It can even tell jokes.

The interface is relatively simple; a user needs only ask a question that begins with Alexa's name. In launching it in the U.K. last month, Amazon suggested various ways British consumers could use the service: "Alexa, did Chelsea win?" or "Alexa, add 'bread' to my shopping list."

UBS' pilot program, which will be based in the U.K., involves a limited test group comprised of clients and non-clients of the firm, a spokesman says. UBS aims to identify and rank what future services might work well and how comfortable clients are with interactive interfaces such as Alexa.

"It's a toe in the water," the spokesman says.

Users who are UBS clients will not be able to check on the status of their portfolios — yet. The firm says it will refrain from linking to client data for confidentiality and security reasons.

Sokolin says that conversational interfaces such as Alexa have become much better due to improvements in AI and natural language processing programs.

"They're not dumb like the early ones were in the 1990s where you needed to say exactly the right thing," he says.

But the key to making the most of such a service is to go beyond financial literacy, Sokolin says. You need to bring it home to the client.

"If it helps them achieve a goal, then it can be very powerful," he says.

The pilot program originated from UBS' Wealth Management Innovation Lab, which is based in Zurich but also has staff in London.

The service could prove to be an innovative way to cut through jargon and better appeal to clients, Dirk Klee, COO of UBS Wealth Management, said in a statement.

"Our pilot with Amazon Alexa is an exciting start into the journey towards virtual assistants and improved client interaction," he said.

UBS is not the first financial services firm to partner with Amazon's Alexa. Lloyds Banking Group is exploring how to use the service in some consumer banking services, according to the company.

Amazon began offering Alexa and Alexa-enabled devices in the U.K. last month. It has been available in the U.S. since June 2015 and will be sold in Germany next month, according to an Amazon spokesman.

"We don’t disclose sales numbers, but there are millions of Alexa-enabled devices out there," the spokesman says.

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Artificial intelligence Technology Wirehouses Online banking Mobile banking Digital banking Lex Sokolin UBS UBS Wealth Management Amazon Bank of America