Founded in the depths of the Great Depression in 1931 in Los Angeles, CA, Capital Group has grown to become one of the world’s largest investment management firms, with $2.3 trillion in financial assets under management. Today, Capital Group is a privately held company employing over 9,000 associates located in offices around the globe and is perhaps best known for its American Funds family of mutual funds.
Like leading companies across industries worldwide, Capital Group has been transfixed by the sudden and rapid emergence of Generative Artificial Intelligence (GenAI). Ernest Hemingway famously said that change comes about in two ways, “Gradually and then suddenly”. Over the course of the past year, we have witnessed the rapid evolution and adoption of a potentially game-changing new technology. Not seen since the early days of the Internet and the beginning of digital transformation a quarter century ago, have we experienced similar levels of interest, excitement, as well as fear and anxiety, as have been triggered by GenAI.
An August 1 survey conducted by IDC and Teradata captures the corporate mood, reflecting the excitement as well as trepidation surrounding GenAI. According to the survey, “Executives at large enterprises across the globe are facing unprecedented pressures around adopting generative artificial intelligence (GenAI). Although nearly 80% of the 900 global executives surveyed had a high or significant level of trust that GenAI could be leveraged for their company’s future offerings and operations, more work is to be done”. The survey notes that 86% of respondents believe that strong governance practices needed to be adopted; 66% have concerns about risks of bias and misinformation; only 42% believe they have the skills in place to implement GenAI at the present time; and just 30% believe they are well prepared to leverage GenAI today.
One thing that is clear from the IDC/Teradata survey is that many executives remain skeptical of GenAI, as they have every right to be until business value is proven. While 89% of executives say that they understand GenAI’s merits and potential, 57% express the view that interest in GenAI will fade over time. Yet, in spite of uncertainties, fears, and skepticism, the majority of executives surveyed – 56% — say that they are “under ‘high’ or ‘significant’ pressure to leverage GenAI within their organization in the next 6 to 12 months”.
It is against this backdrop of opportunity, challenge, uncertainty, and game-changing promise, that Capital Group has embarked on an ambitious enterprise-wide endeavor to integrate and leverage GenAI in its business and technology processes in an effort to realize and maximize the potential of this powerful new technology.
I spoke with Capital Group Corporate CIO Marta Zarraga about the journey that Capital Group is embarking upon. Zarraga comes well prepared for the challenge, having a history of helping spearhead technology-driven transformation efforts that have delivered compelling business value. A native of Bilbao, Spain, Zarraga began her career in the telecommunications sector, rising to become the Retail CIO at British Telecom and U.K, CIO at Vodafone, before assuming the Global CIO role at the London-based financial services firm Aviva. She assumed her current position as Global Chief Information Officer of Capital Group in 2020.
Describing her mandate and mission for GenAI within Capital Group, Zarraga frames the challenge by posing the question, “How do we embrace this new technology responsibly?” Given the power and potential of GenAI to generate productivity gains, where does the company focus its efforts and how does it manage the potential risks? These are the kinds of questions that are naturally intuitive to an investment business based on managing risk and delivering results.
Zarraga explains how the organizational embrace of GenAI represents a balance between the excitement GenAI is creating and a thoughtful approach to the adoption of the technology across Capital Group. Zarraga outlines the approach that Capital Group is undertaking to manage the pace at which the organization scales its efforts, amongst other elements, she talks about:
- Deliberate Experimentation and Learning
- Curation of Business Use Cases
- Roll Out to Maximize Impact and Measure Results
- Educating the Organization
- Manage Risks
For Capital Group, the process begins by identifying the opportunities to create value in the business, prioritizing business and technology use cases for “deliberate experimentation” and actively managing risks. For example, potential ‘Productivity gains” need to be balanced with concerns about accuracy, particularly given the experience of “hallucinations” that early experimenters have noted.
One area of strong potential value for Capital Group is in generating new content in marketing. The opportunity to boost the as the ability to quickly synthesize large volumes of data can be highly impactful. Similarly, translating content offers another promising area of inquiry. There are other areas of adoption like in the technology space, helping developers generate code or, of course adopting Gen AI embedded in enterprise software. Capital Group is experimenting with the rollout of GenAI capabilities in support of these areas while measuring and evaluating the resulting business impacts.
As with any successful initiative, buy-in and support depends upon leadership from the top of the organization. The GenAI initiative at Capital Group is a corporate-wide effort, with strong sponsorship and endorsement from the leaders of the organization, the Board.
For her part, Zarraga approaches GenAI like a very powerful and disruptive new technology, with a healthy dose of both excitement and responsibility. She talks about the absolute necessity of maintaining a “human in the loop” within all aspects of GenAI. She notes that while the productivity gains can be significant, it is vital to ensure that the necessary checks and balances are in place when it comes to using the outputs generated by GenAI models.
Zarraga sees GenAI having a particularly transformational impact in its ability to analyze data at an exponentially greater level of speed and scale without technical coding. GenAI can be used to not only summarize vast amounts of reading material, but to prioritize these materials for their relative importance. The potential impact of getting timely insight in the hands of Associates providing phone-based service via chat interfaces is one such exciting possibility.
Most importantly, Zarraga notes the direct participation of the company’s security, legal, and risk teams at each step of the process to imbed security processes, musing that “robots cannot keep secrets”. Zarraga concludes, “We think GenAI can transform the way in which we work. This technology is powerful and rapidly evolving and we are excited about exploiting it to its full potential. We are embracing it and learning at every step of the way”.
In this way, Capital Group is applying the lessons learned from managing opportunity and risk for 92 years, and taking a thoughtful, systematic, and committed approach to leveraging the power and scale represented by GenAI, as it continuously evolves its investment management business for the next century of operations.
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