Financial Advice: Man Vs Machine

Lloyd’s Banking Group‘s made a recent decision to close a further 49 branches across the UK this year,  including Bank of Scotland, Halifax and Lloyds branches, causing a total 99 jobs to be lost, and is to reduce costs as customers increasingly turn to online methods of banking and finance. This news comes alongside the Royal Bank of Scotland group also planning to close a whopping 259 branches across the UK.

It’s therefore no surprise that these widely deemed “savage” cuts are causing much controversy throughout the country, creating a battle between the development of online “robo-advice” and the value of more traditional human face to face advice.

Some of the most important financial decisions in our lives, such as taking out a mortgage, or investing in a pension scheme, are huge long-term commitments, which should be treated with great respect and thought before signing on the dotted line. Traditionally with the help of a financial adviser, after understanding your circumstances and conducting extensive research of the market, you would receive a personal recommendation on the most appropriate product or service for you based on your needs.

Thanks to artificial intelligence, “robo-advice” is fast becoming an ideal and far more cost-effective solution for many banks and lenders. Customers would deal with a digital online “adviser”, and based on multiple algorithms it would allow the customer to be guided through a series of questions and then presented with a solution.

Due to this inevitable development in technology, the British Bankers Association (BBA) confirmed in a recent report that we are already progressively dismissing the once conventional process of sitting down with a qualified adviser to guide us correctly through the financial maze. The “An App-etite for Banking” report by the BBA goes on to declare that activity on banking apps has rocketed by more than 350% since 2012, with consumers increasingly using online web chats and forums for advice on their finances.

It’s therefore easy to see why banks and lenders view online “robo-advice” as a far more attractive method of delivering their products and services to consumers, largely due to its low costs in comparison with the expensive task of funding multiple local and fully staffed branches. However, despite this decision to go digital, many consumers are still leaning towards the good old fashioned way of simply dealing with someone face to face.

A recent study by HSBC showed a more prudent approach is still being adopted when it comes to using technology in the mortgage market. The study established that only 1 in 5 people would actually trust a robot to give them mortgage advice. This is not with much surprise due to the complexity of the industry, whereby research from the Intermediary Mortgage Lenders Association (IMLA) found that only 47% of buyers who begin the mortgage application process actually reach completion of the house sale. Furthermore, that 67% of lenders report that “too much paperwork” is the main source of consumer frustration. Typically, a financial advisor would take care of all the necessary paperwork for you, whilst also tackling and overcoming most common hurdles that may arise through the house buying process.

Many critics have also been quick to point out the deficiencies of online advice, and with good reason. An obvious argument to make would be the major doubt whether a machine can really emulate a human broker’s capability to gauge a client’s situation. A machine’s end output will only ever be as good as the data that has been input, i.e. the quality of the information being given to the system is crucial for the customers outcome. For example, individuals may enter factually incorrect data which the online system will respond by offering them advice which may be completely unsuitable for that customer. And when dealing with largely imperative transactions, such as your mortgage, it can have potentially huge consequences.

The same argument could very well also be applied to the processing of data by human advisers, who are only able to advise based on information they are given by the client. However, the human has that all important ability to probe further based on their instinct and past experiences – a machine does not.

Nonetheless, there is a lot to be said for the advantages of going digital and embracing the movement towards utilising online financial services. The instant communication between brokers and lenders, access to wider product ranges, and faster information processing are to name but a few useful benefits. For the industry to continue to grow and thrive in today’s modern environment, advisers must understand the endless possibilities technology can offer their clients, whilst still using their “human touch” to provide a personalised service for the best outcomes. This is especially true when dealing with the younger generations requiring financial advice, as Joe Pepper, Managing Director at EDM MSS, commented “Millennials have grown up immersed in technology and like to use their smart phones for all kinds of purposes, including their banking. However, smart phones are still largely absent from the mortgage-buying process and the industry certainly hasn’t kept up in providing the technological experience that its customers enjoy elsewhere.”.

So although branch closures and the farewell to many in-house banking advisory staff is a daunting change for many of us, this is not the end of the traditional face to face financial advisers, and certainly not to financial services as we know it. There is a clear relationship between humans and technology which is fast becoming stronger, and brokers and lenders must continue to combine the best of both worlds to make the quality of the advice for the customer a top priority.

At Tru Wealth, we pride ourselves on modern but simple financial advice. That’s why we are always on hand to meet you in person whenever, and wherever is most convenient for you. If you would like to speak to one of our “human” advisers, please get in touch with us to arrange a chat via our website or via Facebook on

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