EBA欧洲银行-BSG-response-to-Consultation-Paper-28JC-2015-080292004-March-2016_11页_274kb

EBA Banking Stakeholder Group Summary on Automation in Financial Advice

Core Content

The EBA Banking Stakeholder Group (BSG) has provided a detailed response to the European Securities and Markets Authority (ESMA) Joint Committee's consultation paper JC/2015/080 on "Automation in Financial Advice." The summary outlines the group's general comments, key views on the characteristics and risks of automated financial advice, and their perspectives on the future evolution of this technology.

Main Points and Views

1. Characteristics of Automated Financial Advice Tools

• The BSG agrees with the general assessment of automated financial advice tools.
• They suggest adding more detail on whether tools use "big data" not directly provided by the consumer.
• Comparison sites and insurance comparators are highlighted as relevant to the study, as they provide services and advice for customer choice.
• Robo-advisors can vary in structure, including being branches of traditional banks or start-ups.
• The BSG notes that robo-advice is more prevalent in the US and may offer potential for cost-effective services in Europe.

2. Additional Characteristics

• The BSG suggests a more detailed description of the algorithms used in automated financial advice.
• Cognitive IT and artificial intelligence are identified as key technologies.
• The use of data for decision-making is emphasized, with concerns over cognitive biases and the potential for price distortion.

3. Examples of Automated Financial Advice Tools

• In the securities sector, tools often include an "entrance test" to recommend assets based on user profiles and risk appetite.
• Examples include AnlageFinder by Deutsche Bank and Ginmon, which offer different investment strategies.
• In the insurance sector, more personal data is required, which raises privacy and security concerns.

4. BSG's Role

• The BSG is not a service provider but acts as a consultant.
• Some members may represent employers offering such products, but the group itself does not.

5. Benefits to Consumers

• The BSG agrees that the potential benefits to consumers are accurately described.
• These include lower costs, wider access to advice, and increased competition.
• However, they caution that lower costs do not always translate to long-term savings, especially with high initial fees from traditional advisors.
• Consumers with limited IT skills may face challenges in choosing between different robo-providers.

6. Benefits to Financial Institutions

• The BSG agrees that the potential benefits to financial institutions are described.
• These include cost savings, reaching non-branch customers, and maintaining records of financial advice processes.
• A reduction in the number of personal advisors is noted, particularly in the UK.

7. Risks to Consumers

• The BSG agrees with the risk assessment and adds several important points:
  • Data security: Especially in the insurance sector, where personal and medical data is often required.
  • Misunderstanding of advice: Machines may not fully check the complexity of advice, leading to potential misjudgment by customers.
  • Market segmentation: Wealthier clients may receive personalized advice, while retail clients may be left with less tailored options.
  • Lack of transparency: It is unclear whether the consumer fully understands the terms and conditions of the advice.

8. Risks to Financial Institutions

• The BSG identifies several risks:
  • Cybersecurity: Cloud storage increases the risk of data breaches and government inspection.
  • Technology barriers: Integration between front, middle, and back office systems can be a challenge.
  • Regulatory compliance: Differences in digital maturity across sectors may lead to inconsistencies in data handling and regulatory requirements.

9. Future Evolution of Automation

• The BSG agrees that the market for automation in financial advice will continue to evolve.
• They note that digital transformation is likely to accelerate, especially in less mature markets like Poland and Turkey.
• There will still be a demand for personal advice, and a one-size-fits-all approach is not advisable.

Key Information

• Digital transformation is a central theme across all financial sectors.
• Consumer trust and data protection are critical to the success of automated advice.
• Regulatory oversight is necessary to ensure transparency and proper handling of data.
• Lifelong learning and IT skills are essential for both consumers and professionals in the financial industry.

Conclusion

The BSG emphasizes that while automation in financial advice offers significant benefits, it also brings new risks and challenges. They stress the need for regulatory clarity, consumer education, and technological integration to ensure the safe and effective use of automated tools in banking, insurance, and securities.