The growing need for digitalization has spurred the involvement of robo-advisors in FinTech. Today, this tech tool is helping to automate numerous financial tasks like providing automatic recommendations, chatbots, and finance management and being used for personalization services. These roles of robo-advisors are leading to becoming one of the key trends.
Importance of Robo-advisors
The advancements in AI algorithms are helping robo-advisors become smarter as businesses integrate them to deliver better financial services. Due to this, financial companies directly reach customers through mobile apps and websites and provide customers with accurate solutions.
Types of Robo-advisors
Robo-advisors in FinTech function in categories with different degrees of automation.
- Fully automated robo advisors: They communicate and provide solutions directly to clients. The tools collect customer data automatically and deliver accurate solutions. Humans are only intervened in the process in cases of technical barriers.
- Hybrid robo advisors: The tools are programmed to provide financial solutions to clients. The process requires human assistants to explain the solutions in detail and give personalized advice to clients.
Models of Robo-Advisors
Here are the following different models financial businesses mostly use based on the degree of automation.
- The discretionary model allows a robo-advisor to execute trades and investment solutions for customers by providing fully automated portfolio management.
- The active advisory model provides customers with regular suggestions and recommendations and gives trading and investment advice.
- The passive advisory model customers directly by providing regular trading and investment advice in a dedicated section in mobile apps.
Also Read: Robo-Advisors in Wealth Management
Benefits of Installing Robo-advisors
- Low fees: One of the appealing factors of robo-advisors for FinTech companies is affordability and easy integration at lower fees.
- Real-time analytics: Robo-advisors provide round-the-clock market assistance through its real-time analytics. Through it, clients and customers can instantly get a market position and invest correctly.
- Documented: Customers can track their investment advice through mobile apps, emails, and website accounts with robo-advisors.