The investment industry’s high expectations of robo advice and the use of blockchain technology have not yet been met. For now, robo advisers have failed to make a decisive breakthrough, according to research by the CFA Institute among more than 250 of its member organisations.
A substantial majority of these appear yet not to use big data analysis, machine learning or artificial intelligence in risk management, compliance or the investment process.
Since the association’s previous study on the subject in 2016, robo advisers may have become part of the investment landscape, but their contribution to profits has been disappointing.
Slow revolution
Strikingly, it is not so much the «start-up disruptors» who use fintech - and thus pose a threat to the established order. It seems that it’s mainly large companies that can afford to invest in fintech as this often involves methodologies that have yet to prove themselves and have an uncertain cost-benefit balance. Smaller companies in the industry are still limited in their ability to commit resources to complex, costly and uncertain fintech solutions.
The CFA Institute therefore describes the expected fintech revolution as ‹more difficult and slower than expected.’ Instead of a rapid acceptance of new technologies by agile start-ups, there has been a slow, fragmented adoption in specific usage situations at very large companies.
Covid-19
Nevertheless, the CFA Institute does not believe the fintech revolution is stalling. Adoption may still accelerate, according to the researchers, if there are powerful regulatory initiatives, rapid changes in consumer behaviour and a stronger penetration of e-commerce and digitisation worldwide. These trends are being accelerated by the Covid-19 crisis, the researchers note.