Banks are well positioned to benefit from robos, but they need to act soon and, of course, they need to proceed cautiously, according to various sessions at the annual Bank Insurance and Securities Association conference held here this week.
Mike Sha, co-founder and CEO of SigFig, presented a general session laying out the sheer potential that banks enjoy largely because of their existing product mix that digital self-service can supplement.
He realized the banks’ potential, stemming from customers’ familiarity and loyalty, about two years ago, he said. His firm was working with a bank on a promotion that didn’t seem to be working. But later they learned customers were receiving the promotional email about a robo product, and then walking into a branch to sign up.
He drew comparisons of banks’ potential product mix from the media and communications world. An offering of checking accounts, savings accounts and investments (including robo advice), could be as big a boon to banks as the combination of internet, phone and cable were to media companies, he says.
That’s dependent, however, on how it’s packaged and marketed. First, banks have to make it easy, and truly seamless for customers to move back and forth between those products. Too often, robos are positioned as an “island,” he said, placed alongside other parts of the wealth management offering, such as bank branch or call center. Islands aren’t good places to do business, he reminded the crowd, as he showed a slide of Alcatraz Island.
Another tip for banks: Make this triple-product offering (checking, saving, investment) the default offering. And finally, make it available at all levels of wealth.
The challenge is that nobody has figured out a way yet to make robos practical on a grand scale, he says, comparing them to the very early days of the internet or cell phones.
Wayne Cutler, executive vice president of consulting firm Novantas, also spoke on the potential of robos in a whimsically titled session called “Hal Has Finally Arrived—It’s Man vs. Machine.” (Hal was the name of the prescient and malfunctioning computer in 2001: A Space Odyssey.)
And 50 years after the movie—almost to the day, Cutler noted—we’re still worried about the use of technology. But this isn’t science fiction, the demand is here, “like or not,” he said.
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