Of course, technology has been a huge driver behind the ongoing changes in the industry, but we have merely scratched the surface.
We are still some distance away from its potential being fully realised.
Take the robo-adviser. Created to bring down costs and open up investment to a whole new audience of customers, robo-advisers use algorithms to assess and ultimately determine a user’s risk profile, suitability and life goals.
This information is then used to recommend an investment portfolio.
With 130 (and counting) robo-advisers on the market, it is evident that this model is delivering for a growing audience. But it remains a relatively blunt instrument.
Despite being built on the foundation of technology, the robo-adviser model is remarkably open to human error.
Ultimately, we as an industry should always be looking for ways to improve the suitability of financial recommendations.
The majority require a new user to fill in a questionnaire when they sign up, and the answers to the questions will inform what the algorithm recommends.
However, if a user submits incorrect data, omits some details, or is simply not asked about a particular aspect of their finances, the algorithm could deliver a misdiagnosed recommendation.
For example, Sarah wants to start investing.
She’s been reading some articles online and thinks that a robo-adviser could be a cost-effective way to get started.
She’s not wrong. But what her Isa robo-adviser cannot see, and what Sarah does not tell it, is that she also has £5,000 of credit card debt and a high-interest loan on her car.
Any human adviser would tell her that paying off her debt is a far more effective use of her savings.
But with access to a very limited set of information, her robo-adviser cannot make that judgement call.
Ultimately, robo-advisers are not yet making the most of the tools at their disposal.
Since the launch of open banking over a year ago it is possible to access a much wider view of a customer’s finances – something that some financial advisers are already making use of.
Robo-advisers have the clear potential to offer truly holistic advice, but manual data entries and fact-finding are often failing to unearth the required information.