Robo-Advisor is a technology that many people associate with the financial industry. In the year 2018, ten years since its invention, several financial institutions around the World adopted it. Leading wealth management companies are now using it. In this article, we want to highlight how Robo-Advisors can be useful in the banking sector in enhancing customer service.
The question that may linger in one’s mind is what would be its offerings in the banking sector. Before we plunge into that, let’s understand the concrete definition of the Robo-Advisor. Robo means automation that uses a mathematical algorithm to provide investment decision. Thus, it lacks human intervention. Advisor means wealth management services.
Therefore, Robo-Advisor in simple terms means an online portfolio management solution. It continues to gain popularity in the financial advisory market owing to improved results. For instance, it translates clients’ inputs into investment logic like proposing the right investment opportunities. Such glories continue to make Robo-Advisor technology elicit importance in the banking industry.
Is Robo-Advisor the Missing Revolution to Meet Increased Customer Demands in the Banking Sector?
The Robo-Advisory have top-notch qualities that today’s customers want in the banking set-up. Customers are seeking web-based services, low-priced accessibilities, and transparency. This trend has made banks to shift their journey map in providing services. Though the Robo-wave may appear as a threat while it forces the banks to redesign, it’s worth embracing.
Thus, the banks should see beyond the threat and seek to leverage the benefits this technology offers. Several banks have already crossed to the Robo-Advisory environment. They claim their push to Robo-Advising integration stems from the desire to accommodate customers’ needs. Increased number of customers wants on-demand banking and personalization.
Such banks include Citizens Bank, a bank in America which introduced the Robo-Advisor services as early as 2017 through Sigfig a wealth management technology provider. The benefits that resulted from Robo-Advice suggested that Robo-Advisor was the element missing in the banking industry. Here are the major benefits of integrating traditional banking with Robo-Advisor.
1. One-stop Solution for Investments and Banking
Bringing the Robo-Advisory to the bank set-up enables merging investments and banking, together. This is something many customers are happy to have, according to a Novantas report. They would enjoy an instant transfer of money from their banks to investment companies. They can make direct deposits of profits earned from their investments. Customers would only need a ‘Virtual Card’ to facilitate such transactions.
This development would serve as a savvy way of controlling clients’ free cash. No idle cash in the bank would go uninvested. It is a sure way of maximizing returns on clients’ assets. Blending of financial advisors with banks digitally brings ‘Platformification’ of financial services. Thus, customers don’t need to engage multiple platforms to access individual financial services. Wealth management and banking will be more aggregated.
2. More Perceived Personalization of Services
With today’s customers’ inclination to personalized services, any business ethos that dilutes this phenomenon may appear irrelevant. Millennials are therefore adapting well to the Robo-banking services because of the prevailing human touch. Robo-Advisor combines human touch and algorithmic interactions. According to the report by MyPrivateBbanking, this is the reason why many Millenials are willing to use Robo services.
There is more experience of customer loyalty and satisfaction in the banks that are already within the Robo-Advisory landscape.
3. Cost Reduction
Customers continue to experience reduced costs with Robo-Advisor technology. There is a reduced cost of transactions as well as reduced advisory costs. When compared to human counterparts, this reduction can translate to about 0.5%. Therefore, this technology is an attraction to the underserved clients to embark on untapped opportunities. It thus promotes not only cost-efficiency, but also revenue maximization.
4. General Convenience
The overall experience of customers is generally enhanced. For instance, customers can transact from external messaging apps like Whatsapp or Facebook messenger. This significantly reduces troubles for customers as they don’t necessarily need to use the bank’s portal for transactions. Robo-Advisors with chatbots further leverage customer service by generating meaningful insights on below-average areas.
For instance, customer challenges can be detected in real-time and resolution established. This also helps to identify latent customer needs and preempt them.
5. Efficient 24/7 Customer Service
Most banks rely on Robo-Advisor to tackle most customer queries such as cheque book requests, balance inquiries and more. Chatbots help employees function more efficiently; thus, they can find and view information more easily. Robo-Advisors can significantly reduce volumes by handling easier tasks around-the-clock. They give support during and outside of working hours. The human agents can then handle the small fraction of more difficult tasks.
Continued revolution of Robo-Advisors is expected to transform banking in a similar manner that internet transformed information industry. They should become an all-encompassing interface to revolutionize the way customers interact with the banks entirely. Thus, banks yet to leverage Robo-Advisors may lose out on significant revenues and also lag on customer experience.
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