Zeroing in on Zero-Touch Robo-Advisors
Few days back when I was working at home, I heard my son from the next room asking for information about a specific city. I was about to Google that information when I heard a voice providing the information to my son. When I went to the room curious to know whom he was talking to, I discovered that he was speaking to “OK, Google,” the voice search tool from Google. When I discussed this with my colleagues, I got to know that most of the kids today are using voice search.
Increased Adoption of Zero-touch Gadgets
The adoption of screen-less or zero-touch gadgets has increased due to popularity of devices like Amazon Echo and Google Homes. According to Gartner, more than half of the US teens are using voice search daily. The product and service industry have recognized this trend. Artificial Intelligence is now getting into the core of business model and consumer behavior. The emerging technologies are eliminating the needs of hands and eyes for browsing. People want to be constantly connected to the Web while they are performing other activities like driving, doing exercise etc. As per Gartner’s prediction, by 2017 room-based screen-less devices will be in more than 10 million homes. In addition, by 2020, 30% of web browsing sessions will be without a screen. Therefore, many people would like to do their online banking transactions or investment planning on screen-less devices.
Challenges with Robo-Advisor
Last few years, we have seen the growing business volume of Robo-Advisor. It has radically transformed the financial advisory industry. In traditional advisor business, the goal planning and portfolio allocation are done through multiple rounds of interaction between the advisor and the investor. Robo-advisors such as Wealthfront and Betterment provide a mobile app to the investor to do the goal planning and portfolio allocation. This enablement has brought down the cost significantly and saved the precious time of the investor. Also, one can start a new account with robo-advisor with a little money, which is not feasible in case of a traditional advisor. Many traditional advisors are adopting robo-advisor as it helps not only acquiring new clients faster, but also saving time from routine tasks like portfolio rebalancing.
The biggest challenge with robo-advisor is that it cannot answer investor questions, which requires human advisor expertise. For example, a human advisor can give context-based advice such the best place to invest in house, best time to exit from any investment based on market condition etc. In addition, the life goals of an investor changes as the person goes through different unpredictable life-events. There can be situations when a person wants to move part of the investment into charity. A software cannot be as flexible as a human who can provide the advice under any situation.
Zero-touch Robo-Advisor and the Benefits
We can see several services in financial institutions are shifting from relying on experts to relying on algorithms. In parallel, the business is also opening access through API for more sharing and new revenue opportunities. This will be adopted by the Advisor industry to provide advisory services on screen-less devices. Consequently, a new business model will have the advantage of both robo-advisor and human advisor. Following will be few key advantages of the new model:
- It will enable the investor to do the goal planning and portfolio allocation without opening a computer screen or mobile device.
- It can approximate near human intelligence with the help of intelligent data and deep learning.
- It will offer pro-active advice to the investor based on a specific life event.
- It will be linked to other accounts of investor; so it can track the saving and spending habits to check the impact of that on overall life goals.
- It will be device-agnostic: Can be used with Alexa or Google Home or Siri or any new touchless device.
The future screen-less model will help advisors get into new investor segments faster. Also, the integration with cross-vertical service industry will enable the advisors to be trusted partners to their customers. The new service rollouts will be faster with the zero screen approach and the customer adaption to new change will cease to be a challenge. With ongoing technology maturation in the robo-advisory space, it’s natural for financial institutions to be bullish about the latent possibilities of conversational interactions for effective wealth management advice.
So, next time, if my son is asking Alexa where to invest his pocket money, I should not be surprised.