Established banks are poised to lose more clients over FinTechs when open banking fully comes to play
As trust in the human element of the financial sector continues to falter in the aftermath of the Banking Royal Commission, a third of Australians would rather trust a robot for financial advice, according to new research commissioned by think tank Thinque.
Tellingly, only 9% of respondents said they would trust a robot for psychology / counselling or relationship advice or allow bots to help them make long-term decisions such as career or marriage.
“Previously, Australians have trusted digital tools with purely transactional activities such as mobile payments...we are now beginning to trust AI to advise us in sectors such as health and travel, and increasingly we are entrusting robots in the banking and finance sector, as many Australians’ distrust in human advisors has mushroomed in the wake of the Royal Commission,” Global futurist and innovation strategist Anders Sörman-Nilsson said.
“During the last few years, the FinTech sector, their user-centric customer experiences, and their seamless solutions have grown digitally empathetic which has led to their mainstream adoption by Aussies.”
Fraud still rules
Although trust in financial robo-advisors increases, research revealed that fraud remains the key concern in the financial services sector.
Out of the 80% of respondents who pointed to digital fraud as their top concern, 41% said that the sheer volume of data transactions done online means information can easily fall into the wrong hands, 39% feel hackers/thieves are evolving faster than cyber security advancements, 15% believed that the average Australian’s lack of understanding of emerging payment technology opens them to attacks, and 4% believe there’s not enough moderation for advancing technology.
According to Sörman-Nilsson, with ‘pinflation’, the use of the same pin code for everything or the management of an overwhelming number of passwords, Australians are becoming very exposed to hackers and frauds.
Get ready for more rocking!
Sörman-Nilsson said customers must learn to “scenario plan when it comes to both fraud and the use of robo (or human) advisors” and financial advisors need to find a way to rebuild public trust in this digital age as they are failing to re-engage Australians at a time when more Australians than ever need financial advice.
He added, the financial industry “will be further rocked when innovations such as open banking fully comes into play, which is already in place in other markets”.
“Open banking requires regulated banks to allow customers to share their financial data with authorised third-party providers (like FinTechs) through APIs. This is to allow consumers to switch banks easily and score themselves a better deal, driving established banks to invest thoroughly in offering the very best customer experience or face the risk of losing many clients to FinTechs,” Sörman-Nilsson said.
