Robo advisor-based financial services welcomed by Singapore consumers

Source: Accenture website.

Eight in 10 consumers in Singapore would welcome robo-advisory services – computer-generated advice and services that are independent of a human advisor – for their banking, insurance and retirement planning, according to new research* from Accenture.

On the other hand, a significant number of consumers still want human interaction for their more complex needs, leaving firms facing the challenge of blending a physical presence with an advanced digital user-experience, as they look to integrate robot and human services.

The global Distribution & Marketing consumer research by Accenture, which includes a survey of nearly 33,000 consumers in 18 countries and regions, found that the vast majority are willing to receive exclusively robo-generated advice for certain banking and insurance products. Consumers in Singapore are now open to robo-advice to help determine which bank account to open (80%, versus 71% globally), which insurance coverage to purchase (80%, versus 74% globally), and how to plan for retirement (80%, versus 68% globally). More than four out of five consumers (84% versus 78% globally) said they would welcome robo-advice for traditional investments, which is what the technology first focused on.

However, the study also found that nearly two-thirds of consumers in Singapore still want human interaction in financial services, especially to deal with complaints (64%) and advice about complex products such as mortgages (61%).

Piercarlo Gera, Senior MD, Accenture Financial Services, said, "We found strong consumer demand exists today for robo-advice in all areas of financial services – banking, insurance and financial advice. While financial institutions may expect to benefit from internal cost reduction by providing customers with a ‘robo’ option, our research found that consumers also expect first-class human interaction. Successful financial services firms will therefore need a "phygital" strategy that seamlessly integrates technology, branch networks and staff to provide a service that combines physical and digital capabilities and gives consumers a choice."

Consumers in Singapore indicated the main attractions for using robo-advice platforms is the prospect of faster (45% versus 39% globally) and less expensive (30% versus 31% globally) services, and because they think computers/artificial intelligence is more impartial and analytical than humans (28% versus 26% globally). The research found that the Asian countries with the biggest appetite for robo-advice are in the emerging economies of Indonesia (92%), Thailand (90%), markets where it is already common to use a smartphone or other digital device as the primary vehicle for financial services interactions. Even in the countries with the lowest demand, which includes Australia (61%) – more than half of consumers surveyed said they are willing to use robo-advice.

The survey additionally found that consumers in Singapore are willing to switch to non-traditional providers for financial services, including providers which are social media platforms. Nearly one-third would switch to Google, Amazon or Facebook for banking services (32% versus 31% globally), insurance services (32%, versus 29% globally) and financial advisory services (37%, versus 38% globally).

For consumers aged 18 to 21 years old, the number willing to switch banking services to one of these companies rises to just 34% (versus 41% globally), indicating that many younger consumers see value in traditional financial institutions. Tech giants are not the only ones putting pressure on financial service firms; nearly the same percentage of consumers in Singapore would also consider switching to a supermarket or retailer for their banking (35%, versus 31% globally) and insurance (34% versus 30% globally) services.

Alan McIntyre, Senior MD, head of Accenture Banking, said, “Consumers expect nearly all of their transactions to be on par with the service they receive from GAFA (Google, Amazon, Facebook and Apple) companies, which poses a challenge for banks in particular. Banks need to create branches that provide an advanced digital experience combined with convenient locations, while also developing an online digital experience that can compete head on with the tech giants. The vast majority of today’s consumers view their bank relationships as entirely transactional; in order to gain customer loyalty, banks have to be more assertive in using technology to provide tailored, personalised offerings when, where and how customers want them.”

Singapore-based Beat Monnerat, Senior MD, head of Financial Services for Asia-Pacific, Accenture, added: “Most Singapore financial services firms do know many of their customers’ preferences, but they should be developing more targeted microsegment products and propositions based on that data. This is why companies such as Facebook, Alibaba and Amazon are successful; they develop niche or targeted propositions based on segmentation data.”

Accenture has further dentified three consumer personas from the research with specific characteristics around what they value most from their financial service providers, how they want to access services in the future, and how they would like to embrace digital innovation.

• Nomads are highly digitally active, ready for a new model of delivery, and represent 39% of consumers surveyed. They are significantly more numerous in less developed economies. 
• Hunters searching for the best deals on price. They account for 17% of the consumers surveyed and tend to skew a little older.
• Quality seekers are looking for high quality, responsive service and data protection, and make up 44% of consumers.

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*Accenture surveyed 32,715 respondents across 18 countries and regions including the US, Canada, Benelux, France, Germany, Ireland, Italy, Nordic countries, Spain, the UK, Brazil, Chile Australia, Hong Kong, Indonesia, Japan, Singapore and Thailand. Respondents were consumers of banking, insurance and wealth management services; they were required to have a bank account and an insurance policy and were asked if they used an Independent Financial Advisor, Wealth Manager or Asset Manager, with total financial advisory responses totalling 9,987. Respondents covered multiple generations and income levels. The survey was conducted during May and June 2016.