“Consumers are being inundated with product and service pitches from established financial companies and startups, and choosing the best ones is becoming ever more difficult.
Increasingly, advice is seen as the feature that can set one offering apart from another. However, tailoring every offering on an individual level poses major challenges. As a result, banks and fintechs see a solution in robo advice, which sprouted in wealth management and has since spread to insurance and now banking.
For instance, Bank of America, which rolled out a self-directed investment platform called Merrill Edge Guided Investing a year ago, has added automated research to the software. It has also expanded the network of human financial advisers who support clients of its Merrill Edge program, a mashup of robo-advisory and human help. On the robo side, Stock Story provides data and digests of investment analyst reports to help clients research individual companies.
U.S. Bancorp’s investment arm partnered in July with FutureAdvisor, an investment advisory firm owned by BlackRock, to develop a robo advice product called Automated Investor. Citizens Bank, meanwhile, is in an active development relationship with the fintech SigFig to develop new automated advice tools for banks.
Personal finance management apps provide data for consumers to ingest. But successfully adding automated advice capabilities through a combination of AI-powered tools and data analysis, with some human support, too, could offer an edge among rivals. Which customer would turn down a helpful suggestion on how to curb spending or save up for a short-term goal?
Expect to see greater collaboration between banks and firms that provide automated advisory services, and the addition of some level of advice support to nearly every bank offering from savings accounts to lending.”