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The robots are coming

Taking control of financial affairs online could get a whole lot easier as access to automated advice comes to Europe.

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Ralf Heim, co-founder of German fintech firm Fincite

Technology already plays a big role in managing money—and that role is about to become even bigger. While using the Internet to access bank accounts and savings is today the norm1,  the financial technology sector is now going a step further and branching out into computer-generated financial advice, also known as robo-advice. We talk to Ralf Heim, co-founder of German fintech firm Fincite, which launched in 2014 and is one of the software pioneers in the robo-advice sector, to hear how individuals are using technology to take control of their finances.


How is technology able to guide individuals in managing their money?
We work with private and retail banks, asset managers and life insurance companies to develop software that can analyse cash accounts and portfolios, build new portfolios, compare old and new portfolios and provide risk forecasting. Our algorithms mean that people can see what is happening with their money in seconds, and they can test out what might happen to their money under different scenarios.

How can automated advice be regulated?
Regulation of robo-advice is a huge topic. Many providers are in a grey area, where it is not clear whether they are offering advice or guidance. Legally, it is easier for them not to offer advice. In the case of self-execution—where clients do everything by themselves—providers have to be clear that they are letting the client decide. In the case of advice, everything must be documented, and clients need to sign forms to say they have seen all of the warnings and that they were asked about their risk capacity. In Germany, we do not see many players in this online advice space.

"Our algorithms mean that people can see what is happening with their money in seconds, and they can test out what might happen to their money under different scenarios."
"Young people who don’t have much money can use technology to help them get started with savings and investment."

By when will computers replace humans as financial advisers?
You will see more young people linking their cash accounts to robo-advice. We can look into a cash account and see that the client could save a certain amount each month based on their net income and outgoings. Young people who don’t have much money can use technology to help them get started with savings and investment; for them it can be fully automated.  The higher up the wealth chain you go, or the more complicated life becomes, the more technology needs the help of humans. Dealing with divorce, for example. Perhaps in 20 years we can deal with these special life situations without human support. 


What would you like to see financial technology do next to help individuals manage their finances?
It needs to help people with financial literacy. If I go to a bank today, I might be sold an expensive fund that isn’t the right product for me. People should be able to go to a website and see if a product is questionable, or if it makes sense for their portfolio. I see it as becoming similar to when you use Google to shop online—but instead of comparing the cost of shoes, you are comparing funds. This might really bring a lot of transparency to the market.

12013 was the first year that the majority of adults with bank accounts in France, Germany, Italy, the Netherlands, Spain, Sweden and the UK used a computer, tablet or mobile phone to access digital banking services, rather than the phone or a bank branch. http://www.eba.europa.eu/documents/10180/1299866/JC+2015+080+Discussion+Paper+on+automation+in+financial+advice.pdf