The `robos` in the front-office – takeaways from Swiss innovators
Watch the gap; between the Attention Economy and financial services.
Market forces are fiercely at work to start closing this gap. I shared insights around this reality and ways that financial services players can participate successfully in this transformation, during my opening talk at the annual event by the Bank Innovation Competence Center[1], at Unil, HEC Lausanne. I also listened to different perspectives regarding `Les robots au front-office`.
Actual experiences and learnings from:
- A Swiss private bank with a global outreach – Julius Bear
- A Swiss online Bank with an in-house robo solution – Swissquote
- A Swiss cantonal bank innovating through Fintech collaborations – BLKB/True Wealth B2B
- A Swiss bank using chatbots – PostFinance/ELCA.
Julius Baer, has already deployed a Digital Investment Advisory suite – called DIAS – in their Luxembourg operations and is in the process of adopting it in its home base. This is a technology stack deployed to empower the Relationships managers of JB so that they can focus on relationships, offer customized insights and reduce the burden of the ever-growing regulatory requirements.
Undoubtedly, the unbundling of financial services that have been instigated by standalone Fintechs, has essentially commoditized several aspects of financial services. Wrapping value-added advice around products and transactions is inevitable and that is what JB is aiming at. For now, and from JB`s experience, there has been no JB customer that has left from private banking to go to a standalone robo-advisor.[2]
Swissquote, the Swiss tech born online bank, has developed its own `robo` offering. Their heavily quantitative approach is well known from the suit of their financial products and services. An online automatic but discretionary approach to investing was a very natural extension of their successful e-trading business. One of their first learnings was that personalization is needed for the automation process. Through a close collaboration with Neuroprofiler, a Swiss-born behavioral finance risk profiler out of the Kickstart accelerator, they offer a dynamic automated risk profiling with gamification elements[3].
Swissquote`s robo is used by some of their end clients but also by asset managers and financial advisors that use the Swissquote technology. The two main learnings are that one of the main in-house uses of their robo capabilities, is from existing customers that leave cash in their accounts without doing anything. Think, for example, a customer using the Swissquote e-trading platform that has often cash that is not at work.
Evidence that robo-advisors can be of value-add to customers that leave cash sitting in their accounts due to inertia.
Swissquote is continuously improving their offering by experimenting with Big Data and AI that can enrich the interaction with customers beyond and in addition to their dynamic risk profiler. Think of an algorithm that sends an sms asking `Dear Efi, ahead of BREXIT, would you want to consider switching off the robo algorithm?`.
Digifolio, is the BLBK robo advisory offering powered by the B2B technology of True Wealth, a Swiss robo that also runs its own B2C offering. BLKB is the most innovative Swiss cantonal bank with an early online mortgage offering and a digital earthquake insurance offering. Digifolio was launched in the summer of 2017 (with a minimum requirement of 5k CHF). One of their main learnings up to now, is also that success can be clearly attributed to the effectiveness of Digifolio to move existing customers from cash in their account, into investing.
As early as 2015, I had introduced the concept of `Unadvised assets`[4] and since, have been looking at ways that Fintechs can `nudge` and grab the piles of cash.
3yrs ago, my 2min view
Digital Wealth management: a videographic update, March 2016
In addition to robos, Oh, the things you could do with the enormous Cash pile! November 2016, in which I looked at `competing` unbundled Fintech offerings.
Thanks to the market feedback shared at the BAICC event, I will be updating the `Unadvised Assets` perspective to check if there has been any noticeable impact on the cash pile possibly from rise automated investing offerings at the B2C and B2B2C level.
PostFinance, a Swiss financial service provider that has been investing in Fintechs for a while, has launched a text chatbot in collaboration with ELCA, a Swiss IT company. Postfinance is the first Swiss bank launching a customer-facing chatbot on its website. This is part of their business goal to offer 24/7 service with no queuing (as in the case of live online chatting with an `agent`) as one of the advantages of text chatbots is the simultaneous handling of requests.
The global chatbot market is expected to reach $1.23 billion by 2025according to a recent report by Grand View Research[5]. The challenges however to adopting chatbot technologies are not negligible. As ELCA explained, there needs to be a clearly defined business goal before designing a suitable chatbot, that of course, needs to be trained with the relevant content. Add to this, the complexity in the chatbot market because of the incompatible between text chatbot interfaces and voice user interfaces. In simple words, the language used and the content for training text chatbots is very different from that of voice chatbots. For example, in text chatbots often answers are provided in the form of links, which cannot work in voice chatbots.
Tech integration is always more complicated than it seems at the surface. Both because of legacy system integrations but also because experimentation maybe needed until the suitable product fit is determined in each use case. Pictet has been using chatbot technology internally, to modernize communication between the front office and compliance. This is a functionality that is also built behind the scenes of the JB DIAS system too.
[1] Agenda BAICC – EE – Seminar Robotics in FS – Agenda f (master). http://www.baicc.news/a-propos-baicc/
[2] JB separated in 2009 from its asset management business.
[3] Neurprofiler is a MiFIDII-compliant customer risk profiler for Financial Advisors.
[4] Salivating for Unadvised assets: a videographic, Nov. 2015
[5] https://www.techradar.com/news/support-agents-versus-conversational-chatbots
