The implementation of the Retail Distribution Review in 2013 made it impractical for banks to offer face-to-face advice to consumers with smaller savings pots. With the advent of robo-advice, banks will once again be able to target these individuals and potentially go beyond investments.
Robo-advice has been one of the hottest topics in the wealth industry for some time; it is sometimes overlooked that the technology can also add real value to retail banking propositions. After all, robo-advice is a low-cost solution that fills a gap for consumers who cannot afford face-to-face advice or who lack the knowledge to go it alone.
RBS clearly sees the potential. The bank has announced it is replacing 220 financial advisors with a robo-advice service; going forward, it will only provide face-to-face advice to customers with more than £250,000 to invest. We expect to see more of the UK’s high-street banks introduce automated online platforms in the future.
Online is now the primary banking channel in terms of overall usage, with 81% of consumers using it in the last 12 months. This shows there is an opportunity for banks to provide advice online and reduce the burden on branches and call centers. More importantly, robo-advice has the potential to go beyond just investments – it could also be used to assist consumers with other aspects of their financial needs.
By Resham Karira, Retail Banking Analyst