AI is increasingly being deployed in the financial sector. A slew of AI use cases have recently emerged, including support for call center operators, analysis of online service users’ behavior, and KYC (Know Your Customer) checks of customers opening new accounts. As AI use has grown, the specter of AI-driven job losses has become a widespread concern. You may or may not believe the prediction that AI will reach singularity (i.e., surpass human intelligence) by the mid-2040s. However, it is for sure AI doom-mongering will likely continue to intensify.

The quest to improve efficiency through automation inevitably entails discussion on what must be performed by humans. Therefore the current digitization process presents more opportunities to reaffirm what only humans can do–in other words, to reassess humans’ value.

For example, humans will continue to play a central role in financial advisory services. Face-to-face service is an essential aspect of financial advice for high net worth individuals (HNWIs) and therefore the job of sales reps to provide advice is presumably one of the lowest-priority automation targets in the financial services sector.

Even so, financial institutions have recently been increasingly installing CRM systems, utilizing email in lieu of phone calls and migrating certain services to online self-service platforms to increase sales reps’ efficiency. Yet there are limits to such automation. Advisory services predicated on periodic face-to-face meetings with customers require human advisors to respond to customers’ changing needs and assuage their anxieties. Complex tax-efficiency strategies specific to HNWIs and support services for management of nonfinancial assets such as real estate and artworks are obviously not amenable to automation.

Even financial asset management requires human involvement. Financial advice entails more than just determining an asset allocation for the customer’s portfolio. Once an asset allocation has been decided upon and implemented, customers remain prone to anxiety in response to market movements or news. Alleviating such anxieties and persuading customers to keep their assets invested in accord with their original objectives is the essential value of financial advice.

Some new robo-advisor players have captured a modicum of market share amid the Fintech boom, but their customers are mostly Millennials that prioritize digital convenience over psychological support. Moreover, growth in fully automated robo-advisor services targeted at Millennials has started to slow markedly. In response, hybrid services that combine humans and automation, such as robo-advisor platforms with human advisors available by telephone, have started to prominently emerge. If robo-advisors aim to gain mass acceptance instead of serving only highly financially literate customers, they must communicate directly with customers to establish rapport with them, relieve their anxieties and gain their deep trust.

With intuition, some services can be easily assumed they must be provided by humans. When humans provide such services, humans need to be utilized efficiently because people are expensive management resources. And the issue of how to leverage humans’ value with machines would become an axis of competition while keeping their human resources at the center of their value proposition. If this happens, companies have various options in terms of deploying humans and machines in combination. How they combine humans and machines could be a core determinant of their respective services’ added value-- they should not simply copy whatever their competitors are doing.

Reassessing humans’ value and figuring out how to leverage it may be a shortcut for companies to identify their own added value amid digitalization both within and beyond the financial advisory services market, including even services where automation has already run its course.

• Yasuki Okai

  Research Director

  Financial Technology Solution Division