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The Growth of Robo-Advisors: A True Transformation of Banking & Wealth Management

Fintech revolution is already here. What’s next? Robo-advisors – a second revolution in banking.

The Rapid Growth of Robo-Advisors

First ever robo-advisors

The first ever robo-advisors appeared when the financial crisis hit in 2008. In recent years, we’ve seen a rise in the development of robotic wealth management solutions. Nowadays, the robo-advisory market is full of sophisticated robo-advisors ready to cover a wide variety of customer needs. Here’s a great article covering the best robo-advisors on the market.

It’s not just about the evolution of robo-advisors as tools, though; it goes much deeper as robo-advisors penetrate banking services.

Robo-Advisors Redefining Finance & Banking

Robo-advisors in finance and banking

A global consumer survey has revealed that transparency, low-priced accessibility, and web-based experiences are in demand when it comes to the financial sphere. Enter robo-advisors – a self-service technology that has what it takes to satisfy those growing customer needs.

Robo-advisors force banks to start reevaluating the design of their frontline services as well as the journeys of their customers looking for financial advice, but it’s not just that – they carry a massive package of benefits for the banks and their clients.

Robo-advisors come in handy in a wide range of financial advisory services – from payment advice and automated investments to mortgage, loan advice, and much more. When compared to financial advisors, robo-advisors provide as good of financial guidance as do human-like advisors, and they are more affordable.

Widespread Adoption

From the looks of it, every industry player wants to get in – and it goes beyond banks.

For example, Wealthfront, a Silicon Valley-based robo-advisor, is considering to add both checking and savings accounts to its services, delivering faster, more convenient money transactions to its customers.

Citizens Bank, in cooperation with SigFiga wealth management technology provider, announced that it’s launching a digital advice solution for its customers; and Webster Bank said it would provide its customers a digital advice platform.

Apps want a piece of the pie as well. For instance, a micro-investing app, Acorns, now offers a debit card to its users. Its competitor, Stash, which made its way into the digital banking market in April 2018, is launching a banking app.

Why Blend Robo-Advice with Banking?

 

1) Customer demand for “platformafication” – it’s no secret that customers prefer to have it all in one platform, both investments and banking – and a Novantas’ report is the proof. The report revealed that 45% of consumers prefer not to leave their primary bank when it comes to investments.

2) Maximum returns – As observers put it: it’s one of the ultimate ways to “control clients’ free cash [which is] often critical to both locking in the client relationship and even gaining more share of wallet from said clients.”

3) Scalability – Robo-advisors are great for providing account support at scale. It’s an excellent tool for reaching out to thousands of customers just before they would have enough assets to be eligible for full-service advice.

4) Banks have changedbanks aren’t what they used to be: ponderous institutions built on inflexible, old infrastructure; they are going digital.

growth of robo-advice assets

With Novantas’ report revealing that robo-advice is expected to reach $1.5 trillion in assets by 2020 – the largest chunk of which will come from Millennial investors – there’s one more reason to capitalize on one of the latest trends in financial services.

 

Robo-Advisors with a Human Touch

Robo-advisors with a human touch

MyPrivateBanking survey showed that wealthy Millennials are willing to use robo-advisors as long as there’s some form of human interaction – that’s something that academics strongly support as well: when it comes to robotics in service, it’s better to have a human-like backup since that way it’s easier to manage unexpected occurrences.

Many financial institutions and companies are trying to find that golden middle between algorithmic interactions and a human touch. For instance, Betterment, a robo-advisor, offers account holders an option to send a message to human advisors on top of automated portfolio management services.

By injecting personalization into robo-advisors, companies can boost transactions and sales as well as customer loyalty and satisfaction. It very well may be that soon we’ll witness the emergence of robo-advisors that provide a wide variety of banking services and can analyze user intent to offer clients both personalization and human-like customer service in real time.

It’s AI-Driven

2018 marks ten years of robo-advisors in financial advice. Nowadays, robo-advisors are on the path of becoming multi-functional wealth management engines based on machine and deep learning, language processing, and data mining methodologies. It’s those methodologies that can make the most of customer data to offer personalized advice.

You can find out more about robo-advisors and if they are worth it from a complete guide on moneyunder30.

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The Growth of Robo-Advisors: A True Transformation of Banking & Wealth Management