EXCLUSIVE: Wealth Management Industry Lags On Bots - MyPrivateBanking Research

Josh O'Neill

7 December 2016

Only 2 per cent of all financial bots – automated assistants that interact with clients using artificial intelligence – are active within the wealth management industry, according to a new study by MyPrivateBanking Research, and reported exclusively by WealthBriefing.

Titled Chatbots for Banking and Wealth Management 2016: Why Financial Institutions Should Employ Virtual Assistants, the report evaluated the bots of 35 financial organisations and nine financial technology firms. MyPrivateBanking found that 77 per cent of bots were text-based, but said there is a growing number of voice-based bots, with 11 per cent offering a combination of both options.

According to the Swiss research firm, the world's leading wealth managers are lagging behind when it comes to their digital toolkits; of the 44 institutions analysed in the study, only one wealth manager offered a chatbot service. As digital conversational user experience is especially popular among millennials, the lack of offerings unveiled in the report could be a symptom of the lack of attention this generation receives from the wealth management industry overall, MyPrivateBanking Research said.

Given the recent rise of robo-advisors and their burgeoning popularity among millennials, it may come as a surprise that there appears to be such an underwhelming focus on automated customer service offerings within the wealth management industry.

MyPrivateBanking's assessment of the regulatory landscape in the bot sphere revealed a lack of clarity on issues of compliance and accountability. Findings showed that only around 30 per cent of bots have gold standard security measures in place, potentially leaving the remaining firms with lower security levels open to cybercrime and data hacks. Despite these underlying concerns, MyPrivateBanking urged wealth managers to get to grips with the technology before it is too late.

“Bots making mistakes at the beginning can never be avoided as it is part of their 'nature' and a very natural component of the machine learning process," said Rosalia Enghuan, senior analyst at MyPrivateBanking. “Wealth managers that decide to 'play it safe' and to launch bots only in a few years down the line will still need to go through this process. This means that their bots will never be able to compete with the ones that were out there much earlier.”

The report also highlighted bots' increasing levels of capability to carry out critical tasks related to customer interface. Some 57 per cent of bots analysed were able to answer the majority of typical natural language questions such as “how do I replace a lost card?” and “how do I change my account password?”.

Regarding financial advice, 39 per cent of bots were able to provide recommendations based on usage patterns and make predictions about future spending and budgets. For example, customers were able to ask “how much is my balance?” and “how much did I spend on food last week?”. Some 55 per cent of bots were able to actively manage finances, with MyPrivateBanking offering the example of moving money between accounts to avoid overdraft charges.

Precisely half of the bots analysed could respond to requests such as “pay my credit card bill” and “please pay Steve 20 euros”.