Fintechs are advanced IT systems, often based on mobile devices, that have been revolutionizing the processes in financial industry for about a decade. They make full use of latest technology, such as artificial intelligence, in particular machine learning. Many innovations stem from high tech companies, particularly start-ups. Some of them are trying to set up mass business of their own, whereas others are suppliers or even affiliates of traditional companies in the financial industry, e. g. credit banks. Fintech has many aspects, among them payment systems. An important one is robo advice, i. e. automated online platforms that provide private investors with financial advice and sometimes also portfolio allocation.
By means of a literature survey, complemented by an interview with a bank professional, the development and the actual state of robo advice are presented and trends for future development are examined. The major findings of this study are the following.
Robo advisors use web or mobile interfaces, sometimes complemented by human advice on request. They use online questionnaires to identify investor profiles. Asset allocation relies essentially on passive investment methods. The providers fall into two groups: large new players such as Betterment or Wealthfront specializing in online investment service; traditional players such as large or medium-sized banks that have entered this business, often warily.
The benefits of robo-advice are a low client entry level in terms of both administrative work and financial means, thus making them an attractive instrument for the financial inclusion of the mass affluent; furthermore, it provides profitable asset management at low cost. An actual shortcoming is the narrowness in terms of both investment options and investor profiles. As any online service, robo advice is exposed to cyber criminality.
The future of robo advice lies in hybrid solutions, which can be implemented in two ways. Either investors use online self-service interfaces but are guided at critical moments by human advisers. Or advisers themselves use sophisticated, AI-based tools that enhance their capabilities – similar to image diagnostic tools which do not replace radiologists but strengthen their power of cognition. Thus, the oft-quoted fear that robos displace humans is not substantiated. Another possible line of future development lies in gamified platforms for goal-based investment. By means of a serious simulation game, investors could model various scenarios comprising their entire lifetime, taking into account their goals at different stages of career, their decisions as well as stochastic influences. At any rate, the roles of both advisers and clients will be redefined towards enhanced, comprehensive client servicing.

Fintechs are advanced IT systems, often based on mobile devices, that have been revolutionizing the processes in financial industry for about a decade. They make full use of latest technology, such as artificial intelligence, in particular machine learning. Many innovations stem from high tech companies, particularly start-ups. Some of them are trying to set up mass business of their own, whereas others are suppliers or even affiliates of traditional companies in the financial industry, e. g. credit banks. Fintech has many aspects, among them payment systems. An important one is robo advice, i. e. automated online platforms that provide private investors with financial advice and sometimes also portfolio allocation.
By means of a literature survey, complemented by an interview with a bank professional, the development and the actual state of robo advice are presented and trends for future development are examined. The major findings of this study are the following.
Robo advisors use web or mobile interfaces, sometimes complemented by human advice on request. They use online questionnaires to identify investor profiles. Asset allocation relies essentially on passive investment methods. The providers fall into two groups: large new players such as Betterment or Wealthfront specializing in online investment service; traditional players such as large or medium-sized banks that have entered this business, often warily.
The benefits of robo-advice are a low client entry level in terms of both administrative work and financial means, thus making them an attractive instrument for the financial inclusion of the mass affluent; furthermore, it provides profitable asset management at low cost. An actual shortcoming is the narrowness in terms of both investment options and investor profiles. As any online service, robo advice is exposed to cyber criminality.
The future of robo advice lies in hybrid solutions, which can be implemented in two ways. Either investors use online self-service interfaces but are guided at critical moments by human advisers. Or advisers themselves use sophisticated, AI-based tools that enhance their capabilities – similar to image diagnostic tools which do not replace radiologists but strengthen their power of cognition. Thus, the oft-quoted fear that robos displace humans is not substantiated. Another possible line of future development lies in gamified platforms for goal-based investment. By means of a serious simulation game, investors could model various scenarios comprising their entire lifetime, taking into account their goals at different stages of career, their decisions as well as stochastic influences. At any rate, the roles of both advisers and clients will be redefined towards enhanced, comprehensive client servicing.

Alt, R., Beck, R., & Smits, M. (2018). FinTech and the transformation of the financial industry. Electronic Markets, 28, pp. 235-243.
Arwas, A., & Soleil, K. (2016). Robo-Advice 2.0: The Next Generation. Journal of Financial Transformation, 43, pp. 30-36.
Autor, D. (2015). Why are there still so many jobs? The history and future of workplace automation. Journal of Economic Perspectives, 29 (3), pp. 3-30.
Bahlinger, T., & Schutsch, M. (2018). Robo Advice aus der Perspektive unabhängiger Vermögensverwalter. AssCompact, Heft 7(Juli).
Baker, T., & Dellaert, B. (2018). Behavioral Finance, Decumulation and the Regulatory Strategy for Robo-Advice. U of Penn, Institute for Law and Economics, 18-19.
Bankerbay. (2019). Cathay United Bank Co., Ltd. Retrieved from Banker Bay: https://www.bankerbay.com/c/Cathay-United-Bank-Co-Ltd/Taiwan/kA12TA
Beketov, M., Lehmann, K., & Wittke, M. (2018). Robo Advisors: quantitative methods inside the robots. J Asset Manag, 19, pp. 363-370.
Beltramini, E. (2018). Human vulnerability and robo-advisory: An application of Coeckelbergh’s vulnerability to the machine-human interface. Baltic Journal of Management, 13(2), pp. 250-263.
Blenman, J. (2017). Top 5 Robo-Advisers in 2017. Retrieved from Investopedia: http://www.investopedia.com/tech/top-robo-advisers
Bröning, T. (2018). Der Mensch als Erfolgsfaktor. Euro am Sonntag.
Brynjolfsson, E., & McAfee, A. (2016). The Second Machine Age - Work, Progress, and Prosperity in a Time of Brilliant Technologies. New York: Norton.
CathayUnited. (2019). Company History. Retrieved from Cathay United Bank: https://www.cathaybk.com.tw/en-us/cathaybk/english/about-us/about-us/company-history/
Dapp, T.-F. (2016). Wenn Maschinen Ihr Vermögen verwalten. Deutsche Bank Research.
Eule, A. (2017). Rating the Robos. Barrons's - The Dow Jones Business and Financial Weekly, 19-22.
Gough, J. (2018). Will Robo Advisors replace Financial Advisors? The Public Record; Palm Desert, 42(55), p. 10.
Grundlehner, W. (2019). Entzauberung des ETF (ETF demystified). Neue Zürcher Zeitung, 7 January 2019, p. 26.
Hüttel, F. (2018). Robo-Advisor: Hybride Intelligenz (Mensch + Software) in der professionellen Vermögensverwaltung. IT Finanzmagazin.
ING. (2018). Robo-advice: A revolution with risks. Retrieved from THINK Economic and Financial Analysis: https://think.ing.com/articles/Robo-advice-a-revolution-with-risks/
Ivanov, O., Snihovyi, O., & Kobets, V. (2018). Implementation of Robo-Advisors Tools for Different Risk Attitude Investment Decisions. roceedings of the 14th International Conference on ICT in Education, Research and Industrial Applications (ICTERI) Kyiv, Ukraine, May 14-17, 2018, Paper 161.
Jung , D., Dorner, V., Glaser, F., & Morana, S. (2018). Robo-Advisory: Digitalization and Automation of Financial Advisory. Business & Information Systems Engineering, 60 (1), pp. 81-86.
Kaya, O. (2017). Robo-advice - a true innovation in asset management. Deutsche Bank Research.
Kelly, J. (2017). Global Assets Under Management Hit All-Time High above $80 Trillion. Retrieved from Reuters: https://www.reuters.com/article/us-global-funds-aum/global-assets-under-management-hit-all-time-high-above-80-trillion-idUSKBN1CZ11B
Kocianski, S. (2016). The Robo Advising Report. Retrieved from BusinessInsider: http://www.businessinsider.com/the-robo-advising-report-market-forecasts-key-growth-drivers-and-how-automated-asset-management-will-change-the-advisory-industry-2016-6
Koh, F., & Phoon, K. (2018). Robo-Advisors and Wealth Management. The Journal of Alternative Investments, 20(3), pp. 79-94.
Lam, J. (2016). Robo-Advisors: A Portfolio Management Perspective. New Haven, Connecticut: Yale College.
Lee, I., & Shin, Y. (2018). Fintech: Ecosystem, business models, investment decisions, and challenges. Business Horizons, 61, pp. 35-46.
Leisinger, C. (2018). Wer wird zum Amazon des Banking? (Who is going to be the Amazon of Banking?). Neue Zürcher Zeitung, 10 December 2018, p.25.
Levine, M., & Mackey, J. (2017). Humans versus Robots - Who to turn to for Investment Advice? CPA Journal, 5.
Ludden, C., Thompson, K., & Mohsin, I. (2015). The Rise of Robo-Advice: Changing the Concept of Wealth Management. Retrieved 03 Nov 2018, from Accenture: https://www.accenture.com/_acnmedia/PDF-2/Accenture-Wealth-Management-Rise-of-Robo-Advice.pdf
Mondres, T. (2019). Bank of the Future. Five Global Fintech Trends in 2018. ABA Banking Journal, 1-2, pp. 52-53.
Praeg, C.-P., Schmidt, C., & Bauer, W. (2015). Tendstudie Bank und Zukunft - Aufbruch zu neuen Kundenerlebnissen und Services in der digitalen Oekonomie. Stuttgart: Frauenhofer.
Puschmann, T., & Alt, R. (2016). Sharing Economy. Business & Information Systems Engineering, 58 (1), pp. 93-99.
Ringe, W.-G., & Ruof, C. (2018). A Regulatory Sandbox for Robo Advice. ILE Working Paper Series, No. 14, University of Hamburg, Institute of Law And Economics (ILE).
Rohner, P., & Uhl, M. (2018). Robo-Advisors vs. Traditional Investment Advisors - an Unequal Game. Journal of Wealth Management, 21(1), pp. 44-50.
Salampasis, D., Mention, A.-L., & Kaiser , A. (2017). Wealth Management in Times of Robo: Towards Hybrid Human-Machine Interactions.
Schwenn Sebring, S. (2019). Service delivery for operations. Mobile Technology Outlook. AI and open platforms are priorities for 2019. Credit Union Management, 1, pp. 14-17.
Sharpe, W. (1991). The arithmetic of active management. Financial Analysts Journal, 47(1), pp. 7-9.
Singh, I., & Kaur, N. (2017). Wealth Management through Robo Advisory. International Journal of Research - Granthaalayah, 5 (6), pp. 33-43.
Sironi, P. (2016). FinTech Innovation: From robo-advisors to goal based investing and gamification. Chichester: Wiley.
Statista. (2019). Forecast of Assets Under Management of Robo-Advisors in the United States from 2016 to 2020 (in Billion U.S. dollars). Retrieved from https://www.statista.com/statistics/520623/projected-assets-under-management-us-robo-advisors/
Stich, A. (2019). Brace for the Third Wave of Financial Planning. Journal of Financial Planning, 1, pp. 28-29.
Van Raaij, W. (2017). Explaining customer experience of digital financial advice. Economics World, 5 (1), pp. 69-84.
Viceira, L., Nolan, P., & Runco, A. (2017). Could the Big Technology Companies of Today Be the Financial Advisers of Tomorrow? MIT Sloan Management Review.
Woodyard, A., & Grable, J. (2018). Insights into the Users of Robo-Advisory Firms. Journal of Financial Service Professionals, 72 (5).