Multi-channel advice technologies like robo and AI do not run the risk of dehumanising financial advice but rather possess the potential to increase consumer trust with financial services.
Speaking recently at a conference on the changing nature of interactions with consumers of financial services, I was asked whether multi-channel advice technologies like robo and AI run the risk of dehumanising financial advice at unnecessary expense. Quite to the contrary, digital advice solutions, when designed as part of a seamless multi-channel offering, have the potential to make financial advice a far more human experience.
They possess the potential to increase trust between consumers and their financial institution. They help consumers act in a time and channel more convenient to them. And they can play the role of the trusted adviser in times of crisis or human fallibility.
Building trust through digital interactions
One of the biggest issues facing the financial services industry right now is customer trust. In the past, leaders of financial institutions have faced the Asian financial crisis and the global financial crisis. But, as ANZ CEO Shayne Elliott has observed, banking leaders today are facing a new style of crisis as they seek to regain community trust. Whereas CEOs responding to financial crisis knew which levers to pull to manage the risks, responding to a reputation crisis lacks such a well-defined playbook.
Deloitte research into customer trust has highlighted some important nuances for solving this crisis of trust. Customers still perceive Australia’s major financial institutions as the repository ‘least likely to fail’ and remain the preferred supplier for savings and loans. The nature of the trust deficit more specifically relates to whether the customer believes the institution will put the interests of the customer ahead of their own.
The good news is that there are some simple remedies to help alleviate these trust ailments. Our research highlighted that the more frequently the institution interacts with its customers, the more trusted they are likely to be.
Contrary to the belief that digital solutions may disintermediate the relationship between advisers and their clients, digital communications can help strengthen the relationship. Digital offers the opportunity to increase the number of personalised interactions, and in doing so, the level of trust. It’s akin to the adage of not educating staff for fear they may leave, or worse not educating them and knowing the uneducated may stay.
This is not to advocate a flood of spam. Digital interactions must be tailored to fit the customer’s personal context. Digital interactions can be designed to progressively educate consumers. Digital interactions can demonstrate a deferral of self-interest. All of which are essential factors to overcoming a trust deficit.
Engaging and exploring – anytime, anywhere
Time poor consumers need incremental points of progressive engagement. The human experience of exploring, learning and developing the comfort to act on significant decisions about your financial future occurs progressively over time. It may start with 15 minutes on the train, however all the information required to complete the advice tools and calculators is unlikely to be readily on hand. So it may require another 30 minutes after the children have gone to bed, and some more another day following discussions with their partner.
Rather than expecting a small number of direct interactions culminating in a statement of advice to be an adequate advice experience, digital advice tools allow new customers to progressively learn and build confidence. This progressive development is more reflective of the natural human experience. However it is critical that the design of these interactions carry the customer’s content and context across channels. The information entered in any session or channel must be preserved, protected and presented back in each future session.
So this doesn’t mean that human advisers are no longer required or won’t be able to deliver value through direct interaction. Quite the opposite. Having invested an incrementally significant amount of effort in the digital environment, a sunk cost bias begins to embed in the customer’s subconscious. They have become more informed, more brand aware and more attached to the brand.
Guidance when it’s needed
When markets inevitably enter periods of significant volatility, advisers are challenged to contact vast numbers of clients in a short period to provide them with appropriate actions and assurance. During the GFC, some nascent digital advisers demonstrated a distinct advantage. Digital advisers were able to rapidly deliver large volumes of clients with email, SMS and even social media direct message communications articulating the actions that had already been taken or recommended on their portfolios to account for market movement. Thanks to the power of goals-based rule engines, portfolio rebalancing capabilities and marketing automation tools, this rapid action can expediently act to assure customers.
From the perspective of the customer, this immediacy of knowledge that their advice provider had evaluated and addressed their personal situation proved a very human experience, irrespective of the fact that machines automated the vast majority of the interaction. Naturally some customers still wish to continue the conversation with their adviser, which from the outset is accelerated on the basis of the rich information and context that has been digitally shared.
This same scenario exists with the daily implementation of well-prepared financial plans. While the plan may be of high quality and exceptionally well prepared, it depends on a human with imperfect abilities to implement that plan. As humans, we are fallible. We have imperfect knowledge of our retirement needs or complex insurance coverage terms. We defer our allocation of time to resolve these issues in favour of activities with more immediate gratification. We suffer from temptations to spend monies we had notionally allocated to longer term goals.
An emerging set of multi-channel advice and guidance platforms are helping consumers overcome their failings and achieve their underlying intentions. Providers like Acorns, CloverGrow Super provide pre-commitment devices to help customers enact on savings plans. Platforms like HelloWallet employ social proofing techniques to highlight positive behaviours demonstrated by peers to motivate action on the longer-term structuring of financial affairs. Locally, our behavioural design team has been working on an array of engagement strategies aimed at helping customers fulfil their intentions, through first hand qualitative research, analysis of transactions and developing behavioural triggers and rules into marketing automation platforms and mobile applications. These solutions are designed to account for human nature and help customers define and fulfil their personal goals.
This is not solely a selflessly motivated exercise in building trust. The revenue opportunities from these activities are significant ranging from increased Funds Under Management, increased occurrence of supplementary advice, increased new product referrals and for some software models additional licensing fees. Together with increased adviser efficiency and service digitisation cost savings, the resulting economic models can be as compelling as the positive impact on customer perceptions and trust.
David Johnson is the director, strategy & innovation at Deloitte Consulting