Exploring the Future of Robo Advisory Services due to Growing Integration with Artificial Intelligence

The integration of digital technologies and financial services has become a regular phenomenon since the Global Financial Crisis of 2008. Ever since then, financial services including those related to banking, insurance, fraud detection, etc., have become digital. Taking this forward, digital interventions have been designed to deliver wealth management solutions and advisories. Robo advisory is a service in which a digital platform is used to offer financial management solutions with the help of algorithmic and automated planning and investment recommendations.

Robo advisory and Artificial Intelligence

Just like any other sector, the adoption of Artificial Intelligence has brought about a lot of changes in the financial services industry. Of all the financial services, robo advisory has been one of the most impacted by the introduction of artificial intelligence. Conventional robo advisory systems take user information including age, current assets and liabilities, income, etc. It then uses traditional algorithms to advise how the user must react to stock market changes and how the user should invest his/her money.

The integration of AI with robo advisors has multiple advantages; it has been seen that AI brings down the operational costs and risks associated with financial management drastically. Additionally, adoption of AI has led to improved customer experience as the loan and credit decisioning enhances significantly. Apart from this, AI has been extremely efficient in detecting financial frauds and complying with regulatory norms. Thus, artificial intelligence comprehensively covers every aspect of robo advisory services.

Important factors influencing the market

The robo advisory market, as per a report published by Allied Market Research, is expected to grow at a stunning CAGR of 32.5% in the 2023-2032 timeframe. The report lists some crucial drivers which might influence the market growth in the analysis period. The most important driver for the growth of the market is the increasing penetration of smartphones and the Internet which makes it easier to access digital financial services.

Also, the integration of advanced technologies like Artificial Intelligence and Machine Learning will further push the growth rate of the market. Moreover, the young generation, nowadays, seems eager to invest in financial securities and bonds. As a result, the demand for robo advisors has expanded substantially, thereby helping the market to surge ahead.

Product launches by key players of the industry

Some of the leading players of the global robo advisory market include Wealthfront Corporation, Ginmon Vermögensverwaltung GmbH, Charles Schwab & Co., Inc., and M&G Wealth. Many of these major companies have launched their own robo advisory services in order to take a lead over their peers and establish themselves as the leaders of this industry. For instance, M&G Wealth, a leading financial and investment solutions provider, announced the launch of a hybrid robo advisor. The robo advisor will help users to manage their ETFs and bonds and invest in different equities so as to maximize profits and minimize losses. It has been designed to run on both Android and iOS platforms as well as a desktop website.

Thus, the global robo advisory market is sure to undergo a lot of changes owing to the increasing integration of advanced technologies such as Artificial Intelligence. The demographic changes and increasing tendency of today’s youth to invest in equities might also play a role in the growth of the market in the coming period.

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