Looking at robo-advice experience in the wealth management industry in the US, the answer is not many, but there are instances where it can certainly play a part in creating efficiencies.
Automated decision-making and processing has been around for some time in the mortgage industry. Robo-advice could be seen as just an enhanced version of such models, as it relies on detailed algorithms to take a customer down a certain route, dependent on the answers received.
The dictionary definition describes these algorithms as “a finite set of instructions that can be performed in a prescribed sequence to achieve a certain goal and has a recognisable set of end conditions.” One could therefore say that detailed credit scoring models combined with EID checks, bank account validation and online data capture have provided this in our industry to an extent since the mid-noughties.
In the sales process, it is likely that robo-advice will minimise human contact, but it may not eradicate it completely in such an important transaction. Every sale must ensure that any robo-advice is robust, sound and can stand up to scrutiny in the same way that it would if the borrower had interaction with a mortgage adviser. A very structured robo-advice process is therefore required, and this in itself should be very auditable as the advice given will be so transparent.
The slow demise of advised call-centre sales has been attributed to the potential for voice recording showing flaws in compliant sales processes, and there will no doubt be regulatory focus in the robo-advice area.
Other areas where robo-advice could provide efficiencies are borrower self-service and even, in theory, parts of the collections process. Basically any area considered compliant or low risk, can be automated through algorithms or decision making.
Robo-advice, virtual reality and behavioural selling are inevitably on the way, and those who embrace these technological enhancements will undoubtedly get ahead of the game.
