Trust & Technology

With nine out of ten people still not prepared to let a computer manage their money, advisers should view automation as an opportunity to enhance and update elements of the traditional advisory service - and not as a threat.

In an ideal world, a well-designed robot would have its customers' best interests at heart, using its sophisticated algorithms to faultlessly match each individual with the most appropriate, affordable product.

But if human advisers are vulnerable to error, bias and corruption, why should customers - and indeed the regulator - assume digital advisers designed by people will be unfailingly competent and honest?

Keeping Control

According to ING research, the majority of customers are unsurprisingly not yet prepared to entrust their financial decisions to a computer.

The 'Mobile Banking 2017 - Newer Technologies' survey found that 91% would not let a computer make money decisions for them. This reluctance to lose control - or perceived control - over decisions may even come at the cost of a better outcome from outsourcing it to an expert or algorithm, according to ING International.

Amongst European customers, nearly two in five (36%) do not want any automated financial activities. This is highest in Luxembourg, Austria and France, where more than half of respondents were not interested in automation.

Automation & Agency

While, at present, regulators will not allow algorithms to make serious financial decisions without human agency, the research suggested that a small number of customers would be interested in a fully automated service. Across Europe, 3% would like a computer to conduct financial activities for them without approval.

More popular, as one might expect, is the idea of accepting advice as long as the robot does not actually make the decisions. Those in the Czech Republic (38%) and the Netherlands (37%) are more amenable to receiving this kind of advice than the average European (29%).

Turks and Romanians (40%; 38%) were most likely to allow a robo-adviser to make financial decisions for them, provided that they were still required to approve the final decision. This compares to a European average of 26%.

"Respondents in the UK were more likely to prefer advice from the internet or specialst websites than those in other countries."

Top for Trust

The research found that, in most countries, there is still a distinct preference for receiving advice from a human. Yet respondents in the UK were more likely to prefer advice from the internet or specialist websites than those in other countries. This may signal a change in the tide, led by younger generations flocking towards FinTech solutions. In the UK, people would be more likely to consult the internet and specialist websites (27%) than a financial or bank adviser (23%) if they had money available to invest. In contrast, just 16% of Europeans would go online and 40% would seek human advice.

Stronger Together

The laws and rules that govern financial intermediaries were written for humans, not algorithms, but, even when the regulator addresses the challenge of regulating nonhuman advisers more directly, humans will still be able to add value where robots cannot.

IBM's Watson, for example, may be able to diagnose cancer more quickly and accurately than any human doctor, but can it demonstrate the same empathy in explaining the patient's prognosis? Or adjust the proposed treatment plan in line with an individual's own choices and requirements?

With advisers facing pressure to offer more to customers - all the while cutting fees - IFAs can use their personal and commercial skills to build businesses alongside the new technology, integrating new automated elements in the areas where humans are less efficient. This enables advisers to excel in the more complicated, individualised areas which, for the moment at least, are likely to remain the final stages of the advisory process, which both the regulator and customer seem less likely to trust to an automaton.

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