Other parts of this series:
In my first blog of this series on our latest UK banking consumer survey—Beyond Digital—I explained why there’s still plenty of life in the bank branch, since even younger customers still value human interaction. In this second post, I look at our findings on a much newer and more virtual channel to market: robo-advice—the new generation of automated financial advice services powered by artificial intelligence (AI).
Banks across the world are continuing to invest heavily in robo-advisery services, seeing them as a way to deliver personally tailored financial information and guidance at high scale and relatively low marginal cost. The headline findings from our study suggest that this investment is justified, with fully two-thirds of all UK customers and 74 percent of millennials saying they’d be willing to receive entirely computer-generated advice on relatively simple decisions such as which type of bank account to open (see Figure 1).
Figure 1: In the future, how willing would you be to receive the following types of advice and services in a way that was entirely computer-generated?
Interestingly, an even higher proportion of consumers—74 percent overall, rising to 79 percent of millennials—say they’re willing to receive robo-advice on more complex issues such as what investments they should make. And as Figure 2 shows, when asked why they’d be happy to accept advice from a machine instead of a human, they point mainly to benefits around speed and convenience, cost, and impartiality.
Figure 2: Why would you be willing to use entirely computer-generated services as opposed to human advisers in the future?
A deeper analysis reveals further significant insights. For example, while 25 percent of all consumers say robo-advisers’ greater impartiality gives them an advantage over their human counterparts, the proportion believing this rises to almost one-third among OAPs—suggesting older consumers are more sceptical about the objectivity of human advisers. And our findings that only 19 percent of consumers think computers are less likely to make mistakes, and that just 13 percent believe their data would be more secure than with a human, suggest the overwhelming majority have limited trust in robo-advisers’ decision making and security.
Our study also indicates that there are some areas of financial advice where consumers feel human interactions have yet to be fully translated into the available technologies. As Figure 3 shows, almost two-thirds think it’s important to have human advisers on hand to provide advice on large, long-term products such as mortgages. In contrast, fewer than half feel they need human guidance on using their bank’s online and mobile services.
Figure 3: How important is it to you that each of the following services is offered in your main bank’s branches in the future?
And in terms of what they value about speaking to a human representative, consumers rate the ability to ask direct questions and seek personalised advice as the top advantage, followed by being able to get what they need faster, and then humans’ better ability to explain complex issues. Interestingly, having a representative who knows the consumer well ranks very low as a benefit.
Figure 4: What do you value most in speaking to a human representative of a bank?
So, what does all this means for banks’ robo-advice strategies and investments? Combine these findings with those I presented in my first blog—including the fact that millennials are the heaviest users of branches, tapering down to OAPs as the lightest—and I believe a clear message emerges: Winning and retaining customers in the future will depend critically on striking the right balance between human-delivered and AI-driven services.
Put simply, banks need to recognise that for many consumers—including younger ones—the shift towards computer-generated services cannot succeed if it’s at the expense of access to human service at their local bank branch. And automation must be used to not only make banks work smarter, but also to improve and personalise the customer experience.
It follows that the next challenge for many banks is to reassure customers that they can receive the same level of service from a robo-adviser, and pull together the various threads of information they hold on their customers to create a personalised yet secure service. Consumers’ readiness to accept robo-advice for some financial decisions means that banks developing these services are pushing at an open door. But this doesn’t mean they can afford to shut off their customers’ access to interactions with real humans.