Explainable AI will blaze a trail in fund administration

Developments in artificial intelligence will rely on improvements in accuracy, reliability and transparency, writes Hebbia's George Sivulka.

What are the biggest obstacles to greater uptake of artificial intelligence and machine-learning technology in fund services, and how would the private funds industry need to evolve in order to avoid those pitfalls?

There are two main obstacles to the uptake of AI in financial services: the need for accuracy and reliability, and change management.

The financial sector oversees billions of dollars and faces rigorous regulations. Thus, a prerequisite for AI integration here is absolute accuracy. Unfortunately, contemporary AI models sometimes provide unsourced or imprecise data. To be considered viable, AI tools must consistently deliver reliable results.

AI is redefining operations in financial entities, demanding a significant transformation in roles and responsibilities. Harnessing AI’s full potential for return on investment mandates robust change management strategies.

At Hebbia, we’ve spent three years developing accountable and transparent AI technology while honing in on world-class delivery for its use in financial services.

How can AI technology help to make back and middle-office tasks simpler?

AI and large language models (LLMs), are game-changers in automating routine tasks and eliminating operational redundancies.

Instead of resorting to fragmented LLM tools tailored for isolated tasks like reporting or legal review, a unified open-ended AI productivity tool is more effective. Generalizable LLM tooling can serve all these teams and prevent knowledge silos and information loss.

Prominent megafunds employ us across diverse teams, from investment to marketing. Our platform expedites processes, from interpreting LP agreement side letters to instant DDQ completion, presenting a reliable data foundation for successive tasks.

Our philosophy at Hebbia revolves around versatility. We engage with diverse teams from leading investment enterprises, ensuring they harness AI’s full potential.

How do you see the uses of AI in private fund administration developing in the next five years?

AI will become indispensable for fund operations. Tasks like data amalgamation, content synthesis and preliminary response generation will be end-to-end AI-driven.

In the next five years, AI can and should run most of fund administration, from automatically generating regular performance analyses to instant regulatory submissions and managing LP queries.

The AI revolution is not limited to the front office – firms that don’t adopt AI will struggle with outdated and manual processes.

George Sivulka is CEO at Hebbia, a start-up focused on developing AI-infused search tools