BRUSSELS, 14 March 2016 – Automated financial advice needs to be subject to the same supervisory requirements as flesh-and-blood advisers, ESBG said this week. In their response to the ESA Discussion Paper on Automation in Financial Advice, the savings and retail banking association thinks that Automated advice should be considered as an "advice" under the relevant applicable legislation, such as MiFID II.
A growth prospect for banks
ESBG sees automated financial advice as a growth opportunity for its members. A greater number of customers can take up financial advisory services via the digital tool. Growth prospects will likely outweigh costs issues, thought higher investment IT outlays are expected, along with added charges incurred by banks to put through change management, marketing campaigns and compliance. Costs will not be significantly offset by shrinking adviser ranks.
For me, or not for me
Delivering advice at the same time to a number of clients without a human touch is noteworthy on a number of fronts. Most notable, service for certain groups could expand as customers feel less constrained by face-to-face appointments or scheduled sessions online. For others, they may prefer to stick with a more traditional form of advisory the association's response points out. Despite a promising future, automated financial advice should not require small investors to switch to automated advice. This especially the case for those who may lack a certain levels of financial literacy and digital skills.
Bringing automated advice into play
Offering financial advice through digital channels is an important step to meet the promise of 21st Century Banking. The technology is important to European consumers because it changes the customer experience, offering them easier access to services 24/7. Automated financial advice tools have been brought into play at some European savings and retail banks. Others are developing such tools and exploring how they could be put to use.
>> See the ESBG reponse to the ESA Discussion Paper