Robots have been on the rise, as if the movie “I, Robot” made in 2004 is
coming alive. Then there is the robo-advice services. Independent robo-advisers
have been around in the U.S. for some time. For example, Betterment managed
over USD1.7 billion in client assets.
Algorithms are the base for robo-advisers that build exchange-traded funds
to meet varying risk appetites of investors. These platforms charge low fees in
a low yield environment.
Charles Schwab, in the U.S., marketed robo-advising with its intelligent
Portfolios in 2015. There is no advisory or account service fees or commissions,
what a boon for investors! Many banks in Asia make good profits from promoting
funds to retail investors. It is only a matter of time before robo-advisers
cannibalise them.
So it is good for banks to develop or tie-up with existing operators.
Independent robo-advisers need customers while banks usually are ponderous in
developing technology or adopting new initiatives.
Alibaba and Tencent will play a bigger role in financial advice. And they
could easily become the new “super” banks!
Reference:
Why Robo-Advisers Are On The Rise in Asia, Larry
Cao, CFA, Fintech 2018 Report, CFA Institute
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