Lufax chief executive officer Greg Gibb shared his vision to make investment healthier at the 10th Caixin Summit held at Diaoyutai State Guest House in Beijing.
“Technology is effecting seismic changes in the financial landscape,” propounded Gibb. “The disruptive revolution in payment and financing has paved the way for a technological transformation of personal investment and wealth management.” Gibb holds great expectations for what a deeper integration of technology and finance will do to elevate wealth management capabilities and allow for healthier investment strategies.
Gibb remarks that a large plurality of families in China seek relatively safe and consistent asset allocation opportunities with a 4% to 7% return. But as the number of products faced by customers continues to rise, the number of suitable choices is actually diminishing – the downturn of interest rates, coupled with structural adjustments within the market, is causing a significant decline in the availability of fixed-return products. This is, according to Gibb, precisely the condition in which advanced big data technologies can assist customers in finding a healthier way to invest.
Drawing from insights gleaned from past performance of the investments made by Lufax customers, Gibb arrives at two observations: that customers in China by and large still do not practice diversification enough, and that their investments tend to have short horizons and frequent turnovers. “The average investment horizon for public equity funds across the Lufax platform is 100 days. We have seen cases where customers rushed to exit one week into their investment when the annualized return reached 5%, which within one week timeframe is but a 1‰ increase,” shared Gibb. Gibb opines cases such as this affirm the necessity of investor education – that diversification reduces exposure and enables better risk management, and that by accepting a reasonable amount of volatility customers will fare better in the long run.
Looking ahead, Gibb advocated for even wider and deeper application of big data technologies through the investment lifecycle, “Smarter tagging has improved data quality and facilitated better, more suitable matching of right customers to suitable products, which in turn helps informing customers of healthy investment strategies and elevates the overall investment capability.”
Gibb sees immense potential in artificial intelligence (AI) bots and foresees them playing a transformative role in the coming 12 to 24 months. By intelligently conversing with customers, AI bots on the Lufax platform are now able to make the investment experience truly interactive and genuinely intuitive. Slowly but surely, AI bots are sharing the duties of investor education, explaining to customers the logic behind investment strategies, and gradually transitioning them from fixed returns to equity-oriented products. Lufax customers who participated in a robo-advisory pilot program are shown to be more open to longer investment horizons and not overly anxious about short-term volatilities.
“The application of AI and big data technologies in our robo-advisory pilot program has already yielded encouraging results,” revealed Gibb. “The average investment horizon of public equity funds in the pilot program has since doubled to 200 days.” Gibb sees huge promises in the role technology will yet play in the capital market, where it can help boost confidence, extend investment horizons even further, and point to a healthier way of investing amid the structural changes in the macro-economy.