About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   tmmonline.nz  |   landlords.co.nz
Last Article Uploaded: Monday, December 10th, 1:26PM
rss
Latest Headlines

AI: Advice's next big disruption

Forget roboadvice, financial advice could be tipped on its head by the sector’s adoption of artificial intelligence technology, moving power from those with the assets to those with the data.

Monday, September 17th 2018, 6:00AM

by Susan Edmunds

A new World Economic Forum and Deloitte Global report has examined what lies ahead for the financial services sector as AI changes the traditional operating models of institutions.

It's something that has started to be trialed on a small scale in New Zealand, particularly by banks offering digital AI "assistants".

But the report said the potential implications were wide-ranging and would require a re-think of many financial services structures. The bonds that had historically held financial institutions together were weakening and new models were being formed.

Instead of mass production, those who succeeded would offer tailored experiences and high customer retention benefits - not high barriers to switching.

As the move to digital distribution and servicing of financial services accelerated, extensive branch and adviser networks would no longer be needed and digital connections would become the norm, it said.

Under a new “self-driving” advice vision, customers would interact with an agent for advice and to customise products, which would then be provided by a one-step-removed manufacturer.

“There will be far fewer interactions between providers and customers as the customer experience is largely automated. However, the interaction points that persist will become increasingly important and advicecentric.”

AI would offer advisers advanced recommendation engines to customise the features and price for each financial product.

Automated, sophisticated advice would allow for a frequent, proactive and personalised service that was not economical under traditional human-based customer service models.

The report said it was not yet clear which AI-driven advice situations would require human advisers and whether that need would diminish.

AI could also have a role stopping impulsive investment decisions, it said.

“Mass-market investors sometimes fall into beginner traps (e.g. buying high and selling low, impulse investing, tax inefficiencies), because the oversight afforded to higher-net-worth clients – such as private bankers – is not available.

“Cross-product analysis can use machine learning to look across a customer’s financial products and automatically optimise areas of improvement.”

It said institutions would need to be highly focused on delivering what customers wanted.

"This means getting to know customers beyond just their finances and looking for opportunities to improve their day-to-day lives."

AI - the future?

The report pondered a scenario in which an asset manager invented an algorithm to invest in the full market, like an ETF at individual level.

• Allowing individual investors to directly own portfolio assets, with custom portfolio weights determined by their investing needs, effectively eliminating intermediary mutual funds, ETFs or other aggregated investment vehicles, and thereby reducing fees considerably

• Allowing investment managers to automatically create optimal asset allocations for investors, in a fashion similar to current roboadvisers, but by investing directly in market assets. This offers dynamic investment strategies capable of being customized, as opposed to relying on retail funds

It said this had not yet proved possible but could develop as technology improved.

You can read the report here.

 

Tags: artificial intelligence

« Former Generate man taps into new service for advisersAnimal cruelty top of investors' worries »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
Subscribe Now

Weekly Wrap

Previous News
Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.79 4.55 4.79 4.99
ANZ Special - 4.05 4.29 4.49
ASB Bank 5.80 4.44 4.69 4.89
ASB Bank Special - 3.95 4.29 4.49
BNZ - Mortgage One 6.50 - - -
BNZ - Rapid Repay 5.95 - - -
BNZ - Special - 4.10 4.29 4.49
BNZ - Std, FlyBuys 5.90 4.69 4.79 4.99
BNZ - TotalMoney 5.90 - - -
Credit Union Auckland 6.70 - - -
Credit Union Baywide 6.15 5.20 5.25 -
Lender Flt 1yr 2yr 3yr
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.70 4.85 -
Housing NZ Corp 5.80 4.69 4.79 4.79
HSBC Premier 5.89 3.99 4.19 4.69
HSBC Premier LVR > 80% - 3.79 - -
HSBC Special - - - -
Lender Flt 1yr 2yr 3yr
ICBC 5.80 4.59 4.69 5.09
Kiwibank 5.80 4.55 4.69 4.99
Kiwibank - Capped - - - -
Kiwibank - Offset 5.80 - - -
Kiwibank Special - 4.05 4.29 4.49
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 6.10 5.10 5.45 -
Resimac 5.30 4.86 4.94 5.30
RESIMAC Special - - - -
SBS Bank 5.89 4.85 5.05 4.49
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 4.19 3.95 4.49
Sovereign 5.90 4.45 4.69 4.89
Sovereign Special - 3.95 4.29 4.49
The Co-operative Bank - Owner Occ 5.75 4.10 4.35 4.49
The Co-operative Bank - Standard 5.75 4.60 4.85 4.99
TSB Bank 5.80 4.45 4.69 4.99
TSB Special - 3.95 4.19 4.49
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.95 4.69 4.79 5.19
Westpac - Offset 5.95 - - -
Westpac Special - 4.15 4.29 4.59
Median 5.89 4.50 4.69 4.79

Last updated: 2 December 2018 8:39pm

News Quiz

The maximum remuneration model for Australian life insurance advisers is to be set at what?

Upfront 40% + trail 20%

Upfront 50% + trail 10%

Upfront 50% + trail 20%

Upfront 60% + trail 10%

Upfront 60% + trail 20%

MORE QUIZZES »

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com