Will Banks Use More Robots
The use of Robo advisors is gaining prominence in mainstream banking circles. Clients have several options available to them when picking investment products. These include the go-it-alone approach where individuals are responsible for the management of their own portfolio of stocks, bonds, cash, indices, commodities etc. This option is best suited to professionals, or investors who understand the intricacies of the financial markets.
The other option is a choice between using traditional banks and investment gurus on the one hand, or the modern-day upgrades with things like discount brokerages. While there is certainly merit in all of these options, many investors are not totally sold on either option. A fusion of these investment possibilities which encompasses online advice with a self-directed brokerage is increasingly preferred by clients.
Fintech Disrupting Traditional Banking
FinTech has dramatically revolutionized the investment landscape, and banking operations are front and centre. New-age investors prefer having a say in how their money is managed, and this need has not been fully satisfied with the options listed above. Instead, clients prefer hybrid options known as Robo advisors. The concept of a Robo advisor is largely misunderstood by mainstream investors. A Robo advisor does not remove the human element from investing and portfolio management.
True to form, Robo advisors do not require clients to meet with investment gurus face-to-face. It is a convenience-based element at play, and one that makes it easier for anyone to instantly initiate trades at the click of a button. Most of the communication via Robo advisors is conducted through secure online connections and chat services such as Skype, messenger, and the like.
More Control Over Financial Portfolios
The Canadian investment scene is slowly adapting to this modern-day technology, but only the Bank of Montréal has infused Robo advisor technology as part of its investments toolkit. FinTech is leaps and bounds ahead of traditional banking. It is a major disruptive force in the financial world, and it caters to a large under-banked or unbanked sector of society. In Canada, the US and across Europe, clients are looking for easier ways to manage their financial portfolios, while still maintaining control over trades that are executed.
The conventional system of entrusting all of one’s finances to a fund manager with a bias towards certain stocks, ETFs or mutual funds is losing traction. Today, investors want to have a modicum of control over their portfolio, and they don’t want the emotional component, or the bias via the investment advisor. A Robo advisor serves this purpose well. Provided the range of financial assets available to the client is all-encompassing, a Robo advisor can pick the appropriate stocks based on client specifications. Hard data is analysed instantly, and the best investment options are provided to the client.
Robo Advisors with Canadian Banks
The do-it-yourself model cannot be ignored by banks for much longer. The explosive growth of FinTech investment paradigms has already caused multiple banks like HSBC, Barclays, Standard Chartered, Goldman Sachs and others to stand up and take notice. Banks are implementing protocols to allow Robo advisors as part of their investment toolkit. One of the leading asset management companies is BMO. What many clients don’t know, is that BMO also has a robo advisor. Through use of this modern-day technology, BMO can now offer exchange traded funds across multiple portfolios.
It is the oldest bank in Canada, and also the first to adopt new-age technologies. Clients can easily synchronize their BMO online banking summary with their investment accounts for maximum functionality. A wide range of exchange traded funds is available, and the provision of Robo advisors makes it easy to use SmartFolio accounts. Account types include RRSP, TFSA, and RESP. By allowing customers to personalize their financial portfolios, it’s akin to a Robo advisor. This is the way Canadian investors are choosing to go, and many other big banks are now taking notice.