Customers wary of robo-advisory jargon: HSBC

Customers tend to “shy away from” the term robo-advisor when it comes to accessing online wealth management services, according to HSBC UK’s head of wealth and advice.

In an interview with FStech to mark the launch of HSBC’s MyInvestment service, James Hewitson spoke of the need to ensure that customers feel secure and in control when using financial services powered by new technologies such as robotics, artificial intelligence (AI) and machine learning.

“We don’t really believe that robo-advisory is a very customer friendly term, it has that sort of sinister sound behind it,” he said. “It’s a term you shy away from when it comes to online investment advice.”

Last month the bank began the roll out of My Investment, an online digital wealth management offering which uses automation and artificial intelligence to guide existing HSBC customers through a 20-minute application process to set up an investment account.

The online service, which is set to be rolled out further in 2019, combines responses to questions with existing financial data to establish risk appetite and suitability for wealth management services.

However, whilst the service - which took two years to develop - is driven by algorithms, Hewitson underlined that there are many points along the journey where customers can opt to speak to an advisor over the phone or face to face.

The service will enable HSBC to compete with FinTech investment apps such as Nutmeg and Wealthify, which offer a predominantly Millennial client base the option to make small to mid-level investments with varying degrees of risk.

My Investment, which starts with a minimum investment of £1,000, is intended as a new entry point for the 2.87 million HSBC customers who have yet to consider wealth management as a way to grow their money, and may be wary of the jargon and paperwork commonly associated with investment.

“Currently, 82 per cent of our customers with investable balances show no evidence of having any previous investment experience, “ Hewitson said.

“We are trying to target a customer base that isn’t particularly investment aware. We want to help them make their money work harder for them. Whilst it is advice and there is a good level of trust in HSBC, a lot of it was around understanding of what they are being asked and what was the right terminology.”

Hewitson acknowledged that the next generation of FinTech challengers has initiated a shift in customer expectations towards real-time and automated services that can be accessed easily and remotely.

“There’s a recognition that these FinTech apps create a level of change in the market and HSBC recognises that and responds to that,” he said. Despite this, wealth management, which has traditionally relied upon the close relationship between an investor and wealth manager is by definition “less disintermediated” than other banking services which have made the shift to digital within the last decade.

“Our view is that there will, at least for the foreseeable future, always be a place for face to face in wealth management space, but there is an opportunity to digitise elements of the journey are clearly important,” Hewitson explained.

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