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Robotics: We don’t really know…do we?

A look into just how much of an impact we should expect from robotics in the asset management industry.

At our recent International User Community Meeting (IUCM) I posed some questions about the emergence of robotics and how they might alter the investment management industry. The questions were included in a session entitled “Digital First”, a new business mantra that reflects the situation where all decisions, projects, and so forth are considered in a digital context, i.e. does it fit the future state of the organization and the challenges to be met?

In the session, we acknowledged the “digital” strategy that most of our clients and prospects have and explained how technology can ensure a business model is, above all else, customer-centric.

We explored how industries have been disrupted by digital technology, highlighting Uber, Airbnb, Spotify, Amazon and Netflix as examples of organizations who provided a service or product that customers wanted, without being bound by the constraints of the traditional industry they operate in. We then talked about automation in financial services and explored the affect it has had on for example, employment (a little) and productivity and efficiency (a lot).

Questions were put to the audience to speculate on the future of our industry and the answers given are qualified by the education, experience, knowledge, and expertise of the people that provided them. In this case, as we were asking the audience to predict the future, the provided answers are a collective opinion and not a definitive answer.

The answers were surprising. Not because they were groundbreaking - after all, the questions themselves were speculative - but because the primary, perhaps only thing we learnt from them was, that “we don’t really know”.

The questions put to the audience were:

  1. How long before a robot, or robotic advice, replaces a traditional business – client advisory relationship?
  2. How long before such robots replace all business – client face-to-face interaction?

 

How long before a robot, or robotic advice, replaces a traditional business – client advisory relationship?

Robotics in investment management

 

How long before such robots replace all business – client face to face interactions?

Robotics in investment management

 

As we can see, opinion is fairly mixed on these questions. Roughly a quarter believe these things will happen within 5 years, while almost half believe it is more likely to be 10-20 years before we see an impact. At the other end of the spectrum are those (also roughly a quarter) who don’t see these scenarios ever panning out.

Perhaps the lack of a definitive response was due to the demographics of the respondents. Perhaps a room full of technologically immersed millennials or a group of Artificial Intelligence, Big Data, and Machine Learning experts would have provided different answers, meaning this post could explore the expected timelines and argue the case for, or against them. Instead, we must tackle the robotics subject without a meaningful statistic to lead the way. To form a qualified opinion on the time and impact of the emergence of robotics in investment management, we must first understand the drivers of technological advancement and the subsequent adoption in industry. The following timeline shows some of the key technological developments in the industrial revolution:

 

Robotics in investment management

 

These are key because they were developed to make processes more efficient, and when applied to industry, make business more profitable as a result. Organizations will seek out technology that increases their efficiency and profitability. If that technology also “delights” the customer and enhances or improves their experience then there will always be a compelling argument for its introduction. Understanding that point increases the validity of an opinion that suggests robotics will emerge in our industry.

Let’s now briefly consider the pros and cons of the introduction of robotics to an organization:

 

Robotics in investment management

And now, wider influencing factors:

Robotics in investment management

 

Throughout history, since it was available, humans have always looked towards technology to make our personal or professional lives easier. In particular, when economic pressure has dictated it, technology has been employed in industry to improve efficiency. We are currently at the beginnings of the fourth industrial revolution – the digital age. If robotics makes service providers more efficient, and subsequently more profitable, it’s hard to argue against their emergence. If we look back at the history of ATMs – as we did at IUCM – there was a twenty-year lag between their introduction and wide-spread mainstream adoption. Technology is now commonplace in our lives and advancement is quick. Therefore, that lag probably won’t be as long. I’d suggest we’ll see mainstream adoption in about 10 years’ time.

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