Low cost, automated investment advice is set to become the core of financial planning services, with a market potential of $19.5 trillion assets under management, according to a new report by Big Market Research, the financial services experts, and The Business Research Company. The current market for robo advice is dominated by the USA, with an estimated $1.2 trillion under management.
In an increasingly complex regulatory environment, many financial institution executives are concerned that they have insufficient staff, technology and budgetary resources to support their anti-money-laundering (AML) efforts, a survey of financial service executives released today by financial technology solutions provider NextAngles™ revealed.
Machine learning; a subset of AI; has seen a tremendous leap in activity since 2011, with substantial increases in VC and R&D investment. For example, 2 Fintech start-ups, Kabbage and ZestFinance, have collectively raised $500 million in funding alone. Meanwhile vendors analysed in Juniper’s research have spent a total of $83 billion in R&D during 2015. Each of these vendors names AI as a part of core strategy.
The report shows that the current market for robo advice is dominated by the USA, with an estimated $1.2 trillion under management. The USA’s favorable regulatory environment, high propensity to save in equities and the size of its retirement savings market all mean that the USA is the most promising market for robo advice. India and China present long term opportunities but continue to be tied to traditional property, gold and money market fund investments. In Europe, the UK looks set for growth, with major pension funds available for investment and a positive environment for fintech.
Globally, an increase in the use of Algorithm-based banking and Robo-Advice is set to significantly affect the Financial Planning market and it is only a matter of time before these trends find application in Africa. Artificial Intelligence (AI) systems are already being used in social media networks to manage the Digital Ecosystems of established financial institutions enabling for a more uniform consumer experience amongst diverse types of services.