Consumers are becoming increasingly open to the use of robo-advisers and AI to help inform and solve the issues that they face in their everyday lives.

Phone assistants like Apple’s Siri and Google Assistant and in-home devices such as Amazon’s Alexa have become common place when looking for the latest football scores or finding out what the weather is going to be like this weekend. Robo chat support is also becoming ‘the norm’, there to try and answer the simple questions quickly and efficiently without the use of a human resource, (although some, myself included may argue about their effectiveness), before guiding you to a human if required.

Investment in AI technology is at an all-time high with forecasts that it will hit $4.5bn by 2021. But with the growing use of artificial intelligence it is perhaps interesting to see that only 5% of finance companies have adopted chatbots (compared to 36% of real estate businesses).

“The #1 reason people dislike calling companies: not being able to speak to a real person right away” – Newvoicemedia.com

Your robo-adviser will see you now

Robo-advisers in the financial sector are becoming a more and more common experience for consumers. In mainstream banks, Natwest launched an AI service in 2017 targeted at customers that wouldn’t usually have access to traditional investment services, with  Santander following suit a short while later with a service specifically targeted at first-time investors. Betterment and WealthFront have robo-financial advisers for investment; SoFi Wealth boasts one for borrowing, saving, spending, investing and protecting, and Bloom provides a robo-advisor to guide customers through their pension options. Not all services have been a success though with UBS closing their service to new customers in 2018 and Investec doing the same in may this year after it racked up losses of £13 million. But beyond the economics where do consumers draw the line between the areas where they are willing to take this kind of advice and support vs. where they want to speak to a human?

A Test Case: Making big decisions using AI

Spurred on to create a mortgage product by the drawn-out application process, it’s fair to say that Habito’s CEO Daniel Hegarty is disrupting the long-standing traditions of the mortgage market.

Launched in 2016, Habito has a simple aim – to help consumers get the best mortgage possible, fast. Offering free mortgage brokerage to the client, this platform is based entirely online and they pride themselves on being jargon-free.

“We are committed to saving our customers time, stress and money and plan to deliver customers unprecedented choice, ease, speed and certainty over their mortgage in 2019.” Daniel Hegarty – CEO of Habito

Habito entered, and still operate in, a market that is deeply fragmented, with the biggest player staking a claim to just 6% of the market (attributable to London and Country). Habito could point to an interesting shift in consumer behaviour when it comes to trust in robo advisers, after all, our mortgages are one of the most important decisions we make in our lifetime – and certainly the largest debt for the vast majority of us.

This mortgage firebrand grew 20% every month over their first 16 months in business. By 2017, Habito had lent £250m to 50,000 borrowers, and had expanded their team to 45 (from 8 at launch). Their efforts have not gone unnoticed either with an award for ‘Innovation in the Delivery of Financial Products’ in 2018, and a balance sheet that has skyrocketed from £1.2M in 2016, to £5.1M in 2017, onto a cool £18M in 2018.

“While we welcome anything that speeds up the often torturously slow mortgage application process, face-to-face advice or over the phone will have a place for a while yet – although mortgage lenders and brokers need to improve their technological offerings”. Jonathan Harris, Director of Independent Mortgage Broker

Companies using AI for these purposes tread a fine line between the capability of the technology to answer customers questions quickly, provide accurate and actionable advice or suggest the right products or services for the consumer and the frustrations that can arise when AI just is not quite fit for purpose … yet. AI is developing fast and will no doubt get to a point where these frustrations disappear but, at least for now, it’s a delicate balancing act. Watch this space the smart robots are coming.