Eight out of ten consumers in Singapore are willing to use robo-advisory services for their banking, insurance and retirement planning, highlighting the growing acceptance of computer-generated advice and services, a survey by Accenture found.
Despite rising adoption of robo-advisors, consumers in Singapore still need human interaction for their more complex needs. The emerging trend is leaving firms challenged as they must blend a physical presence with an advanced digital user-experience.
“We found strong consumer demand exists today for robo-advice in all areas of financial services – banking, insurance and financial advice,” said Piercarlo Gera, senior managing director at Accenture Financial Services. “While financial institutions may expect to benefit from internal cost reduction by providing customers with a ‘robo’ option, our research found that consumers also expect first-class human interaction.”
According to Gera, successful financial services firms will be those with a “phygital” strategy that integrates technology, branch networks and staff, which deliver services combining physical and digital capabilities.
Image credit: Business Human and Robot hands in handshake, by Willyam Bradberry, via Shutterstock.com
The survey findings echo a report released earlier this year by My Private Banking Research which predicts that hybrid human and robo-advisors will outpace stand-alone robo-advisors in the next several years.
The hybrid model, which includes automated and traditional human services, is set to grow to US$3.7 trillion assets worldwide by 2020 and US$16.3 trillion by 2025, 10% of all investable worldwide assets. Meanwhile, “pure” robo-advisors are expected to manage only 1.6% of global wealth by 2025.
The Distribution & Marketing Consumer research by Accenture, which includes a survey of nearly 33,000 consumers in 18 countries and regions, found that the vast majority of consumers are willing to receive exclusively robo-generated advice for certain banking and insurance products.
In Singapore in particular, 80% of respondents said they were open to robo-advisors to help them determine which bank account to open, against 70% globally. 84% of Singaporeans said they would welcome robo-advice for traditional investments, 80% to help them decide which insurance coverage to choose, and 80% for retirement planning.
Consumers in Singapore said that the main advantages of using robo-advisors were the prospect of faster and less expensive services. They also believe computers and artificial intelligence are more impartial and analytics than humans.
Moreover, the survey found that consumers in Singapore are willing to switch to non-traditional providers for financial services. 32% said they would consider using banking services and insurance products provided by Google, Amazon or Facebook.
“Consumers expect nearly all of their transactions to be on par with the service they receive from GAFA (Google, Amazon, Facebook and Apple) companies, which poses a challenge for banks in particular,” said Alan McIntyre, senior managing director and head of Accenture Banking.
“Banks need to create branches that provide an advanced digital experience combined with convenient locations, while also developing an online digital experience that can compete head on with the tech giants. The vast majority of today’s consumers view their bank relationships as entirely transactional; in order to gain customer loyalty, banks have to be more assertive in using technology to provide tailored, personalized offerings when, where and how customers want them,” McIntyre advised.
Singapore-based Beat Monnerat, senior managing director and head of Financial Services for Asia-Pacific, said that although most of Singapore’s financial services firms were aware of their customers’ preferences, many still haven’t developed targeted micro-segment products and propositions based on their data.
“This is why companies such as Facebook, Alibaba and Amazon are successful; they develop niche or targeted propositions based on segmentation data,” said Monnerat.
A previous research paper by Accenture advised financial services firms and banks to learn from successful consumer-to-business (C2B) leaders such as GAFA and build partnerships with fintech startups. The banking sector is rapidly changing and evolving toward C2B relationships as consumers are increasingly demanding greater accessibility and control, the report says.
Alongside the banking sector, tech giants are also increasingly becoming a threat to the insurance industry where 40% of professionals are considering Google as a potential competitor, naming the firm’s strong brand and ability to leverage customer data to offer personalized services.
Featured image: Robotic arm working with computer keyboard closeup image by Willyam Bradberry, via Shutterstock.com.
