Lufax chief product officer Jeff Li spoke about the roles of data, artificial intelligence, and machine learning in wealth management at the inaugural Greater China Alternative Investments and Alternative Data Conference organized by the Beryl Consulting Group and Global Tone Communication Technology (GTCOM).
“Lufax conducts its business completely online. Our interactions with customers are mainly achieved through mobile apps,” explained Li. “This makes behavioral data all the more valuable and imperative.” Instead of constructing customer profiles through in-person meetings, Lufax leverages behavioral data generated from the use of its platform, as well as official and public data to formulate a multi-dimensional risk profile, where risk attitude, capacity, and appetite combine to inform the determination. The system takes into consideration the biographical, financial, and lifestyle information customers voluntarily enter themselves to understand and anticipate their wants and needs, and project their future investment paths.
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On the product side, Lufax has more than 5,000 products on its platform, including mutual funds, pension funds, private equity funds, structured funds, etc. “We take due diligence seriously and look deeply into the underlying assets of each fund, as well as the identity, skills, and style of the fund manager,” expounded Li. “Furthermore, we are vigilant to the regulation changes that pertain to the companies the fund invests in to better manage risks.” Lufax uses knowledge graphs, a big data technology, to connect the dots of these disparate data points and produce a dynamic and in-depth profile for each product.
The application of artificial intelligence and machine learning allows Lufax to not only handle scale, but also do so with finesse. “The matching solution we deliver is more sophisticated than typical robo-advisors that perform a five by five mix and match. We are able to provide nuanced, bespoke services to customers based on their individual circumstances. Lufax’s dynamic risk matching evolves with evolving factors, such as market conditions and lifestyle change,” said Li.
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“An area of focus for us is to go beyond simply knowing who our customers are, but also gaining understanding of what they want,” said Li. “Lufax has developed a Know Your Intention (KYI) module to help optimize how we serve our customers.” Lufax is the first in China’s digital wealth management sector to map out its entire platform with more than 100,000 neurons to identify where breakdowns occur. KYI maintains algorithmic models to predict where customers may need help, and actively renders assistance without prompting. KYI also uses Natural Language Understanding (NLU) to empower wealth management bots to interact with customers. The module takes into account information such as what kind of articles customers like to read on the Lufax platform and what sort of sectors in which they seem to be interested, and helps the bots recommend the most relevant products.
“Thanks to Lufax’s financial DNA and partnerships with hundreds of financial institutions, we are able to access more, and more diverse products, and match investment horizons to the preferences of our customers,” said Li. “By synthesizing traditional data and alternative data with Fintech we strive to bring about the best of both worlds and gain an edge in improving suitability and increasing return.”
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