HSBC plans holistic robo-advice product
HSBC is planning to introduce a robo-advice platform next year that provides financial advice rather than just automated investment portfolios. The firm is hoping to eventually expand the usage of this platform to help consumers manage other areas of their financial lives, such as pensions and insurance. The firm already has a financial advice offering that provides alerts to clients encouraging them to save more and put money to work in investments. It is reported this service will be integrated into the new platform. 

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HSBC's head of retail wealth, Dean Butler, provided his perspective on automated advice, and the bank's plans for new products in the area, at the UK Robo-Advice Innovation Forum on Wednesday, attended by BI Intelligence.

Butler believes there are both positives and negatives associated with current automated investment products:

On the plus side, current products are affordable; easily accessible thanks to their digital format; and often educational, in that firms offering the solutions take pains to provide tailored marketing materials.

current products are affordable; easily accessible thanks to their digital format; and often educational, in that firms offering the solutions take pains to provide tailored marketing materials. On the other hand, Butler believes the sheer number of automated investment products available is confusing to consumers, as they find it hard to understand any differences between products. Additionally, he said the complex language associated with all investment products, which is often a requirement of regulation, is off putting.

HSBC is planning to launch a new product in 2018 that counters these downsides.HSBC’s new product, dubbed Robo-Advising 2.0 by Butler, will provide holistic financial advice, rather than just automated investment, helping it to differentiate. His vision for the product includes transforming an existing offering that “nudges” customers into saving more via simple notifications into a financial advice tool, in order to help customers better manage their entire financial life. Eventually, that will include recommending and managing additional products such as pensions and insurance.

HSBC’s goal is admirable, but it will have to move fast. It seems probable that customers will be more likely to take an investment product from their current bank than from an unknown startup, as a trusted brand would help alleviate the mistrust many consumers feel toward automated investing. Additionally, HSBC’s plan to enable customers to see all their financial details in one place will likely prove popular.

However, with open banking approaching fast, other banks will no doubt be planning similar propositions, and the new rules will make it easier for them to pull in ready-made investment products from startups, meaning HSBC will have to move quickly if it wants to benefit from a first-mover advantage.

BI Intelligence, Business Insider's premium research service, has put together a detailed report on the evolution of robo-advising that scopes the current market for robo-advisors, providing an updated forecast through 2022. In addition, it explains the different types of robo-advisors emerging, details how startups and incumbents are working to ensure the success of their products, and outlines what will happen to the market over the next 12 months.

Here are some of the key takeaways from the report:

BI Intelligence forecasts that robo-advisors — investment products that include any element of automation — will manage around $1 trillion by 2020, and around $4.6 trillion by 2022.

Startups offering robo-advisors are struggling to acquire AUM due to overcrowding in the global robo-advisory market and lower than expected customer uptake.

Incumbents are rolling out their own robo-advisor products, a trend we expect to pick up in the period to 2022.

North America remains the leading robo-advisory market, but we expect Asia to catch up and outpace the region in terms of AUM managed by robo-advisors in the period to 2022.

There will be a winnowing of the startup robo-advisory market as only a few firms remain stand-alone, while incumbents looking to launch their own products will profit from purchasing the technology of startups that have fallen by the wayside, at low cost.

In full, the report:



Provides a forecast for the volume of assets robo-advisors will manage by 2022.

Outlines the current robo-advisory landscape.

Explains how startups with robo-advisor products are evolving their business strategies.

Provides an outlook for the future of the robo-advising industry.

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