Roboadvice is coming

PwC has released a new survey which shows two-thirds of financial services company say pressure on their profit margins is the top fintech-related threat, followed by loss of market share.

“As with all markets around the world, the emergence of fintech companies in New Zealand is increasingly redefining customer expectations, with customers now expecting real-time responses, simplicity, increased functionality and usability in ways that can make it difficult for our larger [financial services] players to respond,” said Andy Symons, PwC’s financial services leader in New Zealand.

“Ultimately, what we need in New Zealand is a strong financial ecosystem where fintechs can continue to innovate and do things differently, but equally, FS companies continue to operate and retain their financial strength and provide market stability and meet the financial needs of millions of individuals and businesses.”

He said investment advisers and wealth managers had voiced concerns about disruption in their industries. But he said it was unlikely roboadvice would replace advisers. “Online advice will suit a proportion of people, those who have more simple needs.”

Those with more sophisticated needs would need to maintain a relationship with advisers or use a hybrid model, he said.

“It’s about genuinely and authentically building a customer-centric offering. Fintechs are very focussed on attracting customers and retaining them, whereas the larger FS organisations have a more complex hierarchy of levers and stakeholders to satisfy,” Symons said.

The survey shows the banking and payments industries are feeling the most pressure from fintech companies.

Respondents from the fund transfer and payments industry anticipate that in the next five years, they could lose up to 28% of their market share to them, while bankers estimate they are likely to lose 24%. This compares to around 22% in the case of asset management and wealth management and 21% in insurance.

Symons said businesses could adapt by focusing on consumer behavior trends even when they did not specifically relate to their own product. Organisations of sufficient scale should not be afraid to try out new technologies as they became available so they fully understand what was available and how it would work, he said.

“Roboadvice is a popular conversation point and we will see roboadvice in New Zealand. But there will be a place for other models.”

In 10 years’ time there would likely be more integrated solutions and self-service, he said.

Comments from our readers

On 19 March 2016 at 2:51 am henry Filth said:

Some of us mug punters already reel as though we're getting robo-advice.

A standard risk profile questionnaire with non-personalized interpretation, leading to an automatic selection of funds from a very limited range, leading to a slew of monitoring, administration, and poorly-benchmarked performance fees.

Would I listen to a dalek giving financial advice? Do I already?

Roll on the robots!

On 23 March 2016 at 11:55 am Selwyn said:

Buyers are now more sophisticated, more demanding and less loyal. There is a large number of "financial planning tools" available now to assess a current situation and track it. Many can now decide what they want before buying a 'product' that suits. Robotic advice will come and just be another option. However what it cannot do is provide a'personalisation' and that sort of service provides many additional benefits, and there will always be a place for that. And so robotics will provide a great market opportunity for advisors!

Roboadvice is coming to New Zealand, says PwC’s financial services leader.

Tuesday, March 15th 2016, 6:00AM 2 Comments

Comments from our readers

www.GoodReturns.co.nz