The entire fund management industry is going bananas over the so-called ‘Robo-Advisors’.
Robo-Advisors are a new form of offering portfolio management services online with minimal human intervention. It’s recommendations are usually based on algorithms that were once the secret weapon ‘quant managers’ developed to propel their portfolios.
Robo-advisors are really becoming sophisticated. They are much like advanced chess computers that also offset their ‘logic’ with programs to account for human behavioural patterns because financial markets are essentially a multi-trillion dollar expression of fear and greed. It’s cutting edge stuff!
But the thing is that we always seem to get ourselves carried away with technology.
It happened during the famous internet craze 15 years ago when anything ending ‘.com' was potentially worth millions despite the absence of coherent business models and we all believed that, before we knew it, our refrigerators would go online and do our shopping for us. I don’t know about you, but I'm still standing in line at the cashier’s desk.
Here's what I think is happening: with ‘robot-finance’ it seems that the finance industry is now rigging technology so it can blast a crater into what is already a fragile estate!
Personally I believe that those who are frantically scrambling to get these robots in front of their customers are making a big mistake. Or rather, they are missing out on a big opportunity by confusing technology with it’s purpose.
In 1996, IBM’s Deep Blue computer defeated Garry Kasparov, the world’s chess champion at that time. Today airliners mostly rely on computers to stay up in the air as do Mars rovers use simple artificial intelligence to make minute-to-minute decisions to keep from getting stuck in alien landscapes. But even back on Earth, you’d be amazed by how all these little micro-processors make your life mostly uneventful. Smart robots are nothing new.
However, what IS truly innovative is that now anyone with access to the internet can have an instant video conversation with someone else, anytime, anywhere, for free on nothing more than a smart phone. This connectivity is actually quite amazing but somehow we already take this for granted even though it wasn’t even possible in 2003 when Skype was invented. In fact this technology had to wait until well after 2007 when the first iPhone came to market.
The point I’m trying to make is that, while these ‘robo-advisors’ can potentially enhance our investment capabilities, bluntly putting them in front of our customers like vending machines will only result in a race to the bottom for the entire industry’s revenue model of providing investment services. What would that mean for defining a value proposition? There aren’t that many ways you can stand out in an environment of ‘my robot is better than your robot’.
And because ‘robo-advisors' can help us with much of the heavy lifting of investing, they also create a lot more time and space for human interaction.
So instead of putting a robot on the customer interface, wouldn’t it make more sense to give the customer a button to initiate a video chat with a friendly human who is assisted by ‘robo-advice’ technology?
Think about the possibilities of scaling up on excellent customer experiences and what it would mean in terms of bottom line, brand and loyalty!
Oh, and in case you hadn’t noticed yet, the one big trend that stood out over the past decade is that humans simply love to use technology for one main purpose: to connect with other humans.
How simple can it really be?
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