Insight
Title:
Artificial Intelligence and Automation could make financial services more affordable
Description:
- Financial Advice:
- Robo-advice could make advice more affordable.
This could be a boon to providers wishing to go direct to consumers, as well as to advisers wanted to provide tiered levels of service to different customer segments.
The regulatory framework, however, remains far from clear.
Research from Which? suggested 58% of people would not currently want to accept an advice recommendation from a computer. Key to combating such concerns is assurance that a reduction in cost is not at the expense of quality. Source: Pension freedoms - Work and Pensions Committee - House of Commons
As artificial intelligence becomes more widespread and people get used to the idea, will they become more accepting of it, or will AI only ever be something that helps a human reach (but then vet) a recommendation more quickly?
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- This could make advice affordable to a wider target market (i.e. those with relatively fewer investments).
- The impact would be greatest in the more data-intensive and research-based areas like paraplanning.
- Investment Management
- Algorithmic trading could make investment management more affordable.
- Insurance:
- AI could reduce the costs of underwriting new business and processing insurance claims.
PESTEL:
Technological
Five Forces:
Bargaining power of buyers