Research shows growing confidence among consumers and business leaders that robots handle finance tasks better than people
The study of more than 9,000 consumers and business leaders in 14 countries found that the COVID-19 pandemic has increased financial anxiety, sadness, and fear among people around the world and has changed who and what we trust to manage our finances. In addition, people are rethinking the role and focus of corporate finance teams and personal financial advisors, according to the research.
COVID-19 has created financial anxiety, sadness, and fear
The global pandemic has damaged people’s relationship with money at home and at work.
- Among business leaders, financial anxiety and stress increased by 186 percent and sadness grew by 116 percent; consumer financial anxiety and stress doubled and sadness increased by 70 percent.
- 90 percent of business leaders worry about the impact of COVID-19 on their organization, with the most common concerns centering on a slow economic recovery or recession (51 percent); budget cuts (38 percent); and bankruptcy (27 percent).
- 87 percent of consumers are experiencing financial fears, including job loss (39 percent); losing savings (38 percent); and never getting out of debt (26 percent).
- These concerns are keeping people up at night: 41 percent of consumers reported losing sleep due to their personal finances.
People see robots as a better way to manage finances
The financial uncertainty created by COVID-19 has changed who and what we trust to manage our finances. To help navigate financial complexity, consumers and business leaders increasingly trust technology over people to help.
- 67 percent of consumers and business leaders trust a robot more than a human to manage finances.
- 73 percent of business leaders trust a robot more than themselves to manage finances; 77 percent trust robots over their own finance teams.
- 89 percent of business leaders believe that robots can improve their work by detecting fraud (34 percent); creating invoices (25 percent); and conducting cost/benefit analysis (23 percent).
- 53 percent of consumers trust a robot more than themselves to manage finances; 63 percent trust robots over personal financial advisors.
- 66 percent of consumers believe robots can help detect fraud (33 percent); reduce spending (22 percent); and make stock market investments (15 percent).
The role of finance teams and financial advisors will never be the same
To adapt to the growing influence and role of technology, corporate finance professionals and personal finance advisors alike must embrace change and develop new skills.
- 56 percent of business leaders believe robots will replace corporate finance professionals in the next five years.
- 85 percent of business leaders want help from robots for finance tasks, including finance approvals (43 percent); budgeting and forecasting (39 percent); reporting (38 percent); and compliance and risk management (38 percent).
- Business leaders want corporate finance professionals to focus on communicating with customers (40 percent); negotiating discounts (37 percent); and approving transactions (31 percent).
- 42 percent of consumers believe robots will replace personal financial advisors in the next five years.
- 76 percent of consumers want robots to help manage their finances by freeing up time (33 percent); reducing unnecessary spending (31 percent); and increasing on-time payments (31 percent).
- Consumers want personal financial advisors to provide guidance on major purchasing decisions such as buying a house (45 percent); buying a car (41 percent); and planning for retirement (38 percent).
Our relationship with money has changed, it’s time to embrace AI to manage finance
The events of 2020 have changed the way consumers think about money and have increased the need for organizations to rethink how they use AI and other new technologies to manage financial processes.
- 60 percent of consumers say the pandemic has changed the way they buy goods and services.
- 72 percent of consumers say the events of 2020 have changed how they feel about handling cash, with people feeling anxious (26 percent); fearful (23 percent); and dirty (19 percent). More than a quarter (29 percent) of consumers now say that cash-only is a deal-breaker for doing business.
- Businesses have been quick to respond as 69 percent of business leaders have invested in digital payment capabilities and 64 percent have created new forms of customer engagement or changed their business models in response to COVID-19.
- 51 percent of organizations are already using AI to manage financial processes, compared with 27 percent of consumers.
- 87 percent of business leaders say organizations that don’t rethink financial processes face risks, including falling behind competitors (44 percent); more stressed workers (36 percent); inaccurate reporting (36 percent); and reduced employee productivity (35 percent).
Felicity Burch, Director of Digital and Innovation at the CBI, said: “The pandemic has been a watershed moment for technology adoption. The financial services sector has innovated swiftly to support customers at a difficult time, and it’s fantastic to see businesses and consumers alike recognising the potential AI has for managing money. Trust will underpin the successful adoption of emerging technologies, and so firms must be taking steps like embedding robust governance processes, engaging employees, and addressing unfair bias in data.”
“Managing finances is tough at the best of times, and the financial uncertainty of the global pandemic has exacerbated financial challenges at home and at work,” said Farnoosh Torabi, personal finance expert and host of the So Money podcast. “Robots are well-positioned to assist – they are great with numbers and don’t have the same emotional connection with money. This doesn’t mean finance professionals are going away or being replaced entirely, but the research suggests they should focus on developing additional soft skills as their role evolves.”
“Financial processes in our personal and professional worlds have become increasingly digital for many years and the events of 2020 have accelerated that trend,” said Juergen Lindner, senior vice president, global marketing, Oracle. “Digital is the new normal and technologies such as artificial intelligence and chatbots play a vital role in managing finance. Our research indicates that consumers trust these technologies to accelerate their financial well-being over personal financial advisors and business leaders see this trend reshaping the role of corporate finance professionals. Organizations that don’t embrace these changes risk falling behind their peers and competitors; hurting employee productivity, morale and well-being; and struggling to attract the next generation of AI-empowered finance talent.”
FINANCIAL SERVICES MUST FIX THEIR MISSED OPPORTUNITY AS CONSUMERS DEMAND MORE ENGAGING DIGITAL EXPERIENCES
- Less than one-third (30%) of consumers believe the Financial Services firms they interact with now deliver a better digital experience than before the pandemic
- Over half (51%) of consumers are prepared to switch to a competitor if their digital experience does not live up to their expectations
Time is finally up for Financial Services firms failing to create the engaging digital experiences that consumers have been crying out for. Almost half of UK consumers (45%) prefer to engage with banks via apps rather than in person with members of staff, while two-fifths (39%) believe their smartphone is more important than their wallet in powering financial transactions (rising to 51% amongst 18-35 year olds).
These are the stark findings from a new study from VMware of more than 2,000 UK consumers, exposing the extent to which the digital-first, customer-obsessed mantra that was ushered in by the FinTechs and Challenger Banks, has transformed the customer battleground.
However, while most industries underwent a seismic digital switch as a result of the pandemic, the Financial Services industry has not matched the level of innovation. Less than one-third (30%) of consumers believe the Financial Services firms they interact with now deliver an improved digital experience compared to before the pandemic.
In a market beset with challenger brands looking for ways to uproot the incumbent providers, this research should serve as a wake-up call to Financial Services firms looking at ways to install brand loyalty. Over half (51%) of consumers would switch to a competitor if their digital experience doesn’t live up to expectations – just 10% would remain loyal.
The areas of investment that will best serve both traditional and challenger firms alike are clear. While there remains an insatiable appetite for better digital services in Financial Services, the absolute priority for three-quarters (74%) of customers when choosing a new provider is security. This unsurprisingly is played back when customers reveal what more they want from their digital interactions, which include:
- a high level of security and protection of their data (70%)
- simple and effective applications (47%)
- and ease of use across all their devices (40%)
The Financial Services firms that will thrive in this new customer battleground will ultimately be those that can establish themselves as a trusted, digital partner. It will also prove a key success factor in the roll out of more innovative products and “smart” services. For instance, while today, if customers had money to invest, just 12% would allow an app to make the investment decisions over an individual that works for the bank, It is those firms that can put trust and transparency front and centre of their offering, that will have the opportunity to capture this lucrative opportunity.
Matthew O’Neill, Industry Managing Director, Advanced Technology Group, VMware said: “After the unprecedented but overdue ‘digital switch’ of last year, consumers are rightly demanding more from an industry where the battle for the best customer experience means success or failure to businesses in the Financial Services sector. In this new battleground, the most successful firms will be the ones that are becoming digital at the core – where they can adapt and innovate faster to create better user experiences, without compromising security, in the process. Those firms who have a digital-first posture, have everything to play for with today’s consumers and not just those that are growing up digitally native.”
This research was conducted by an online survey, commissioned by VMware, of 4,102 EMEA consumers across 3 countries – UK (2,069), France (1,028), Germany (1,005). In this online survey, consumers were asked to rate their digital experiences across five sectors – Retail, Healthcare, Financial Services, Education and Government (local and national). YouGov conducted the survey in November 2020.
VIRGIN MONEY EXPANDS PARTNERSHIP WITH FINTECH LIFE MOMENTS
Virgin Money is expanding its partnership with FinTech data expert company, Life Moments, to focus on the development of the sustainability elements of the Virgin Money offer to its business banking customers.
The agreement is the latest partnership from Virgin Money as it continues to develop its working capital health proposition, which will be launched in the Autumn. This will transform the Bank’s existing business current account and forms part of its commitment relating to the recent £35m award from the Banking Competition Remedies (BCR) Capability and Innovation Fund.
Life Moments is a leading provider of platforms and tools to improve customer experience and generate data insight. The company has worked with the Bank since early 2020, developing and launching Virgin Money’s Home Buying Coach app, designed to simplify the home purchase process and help first time buyers on to the property ladder. The company will now work on digitising and capturing customer responses to an ESG benchmarking tool, developed by the Bank in conjunction with Future-Fit Business, as well as integrating the results and data into the Bank’s new Business Current Account Wellness Tracker, providing tailored digital coaching for businesses.
Virgin Money, which joined the Future-Fit Development Council last year, is the first company in the financial services industry to use the Future-Fit Benchmark for commercial banking. The tool, which can be used by any business of any size, whether they are a Virgin Money customer or not, has a user-friendly set of questions to help a company understand its current position, via both an ESG score and guidance on the steps that could be taken to create a more sustainable model.
The agreement is also expected to contribute towards Virgin Money’s recently launched ESG commitments and aspirations, including at least halving its carbon emissions across everything it finances by 2030. Within business banking, and part of its BCR commitments, it will increase lending by an extra £2.2Bn by the end 2025 (£0.5Bn by end of 2022), with more than £100M of new lending going to clients pursuing environmental, social and governance aims.
Gavin Opperman, Group Business Director at Virgin Money, said: “Sustainability is a key element of our new working capital health proposition. Life Moments has brought exciting innovation into our mortgage business, so it was a natural progression to invite them to collaborate on enhancing our Benchmarking Tool and support our ambition to help our customers on all aspects of their ESG journey. We have created a strong base but there is more to do, which is why this partnership with Life Moments is so important the development of our new business current account.”
Ben Leonard, CEO and Co-founder of Life Moments, said: We are delighted to have the opportunity to extend our partnership with Virgin Money and apply digital coaching to business banking. We see many similarities between the support & nurturing we have developed with Virgin Money for first time buyers and how to help small business owners so are confident this will enhance the business banking proposition. Being able to apply our platform technology to helping businesses embed sustainability is extremely exciting for us and aligns perfectly with our profit & purpose mission.”
Graeme Sands, Corporate and Mid-Market Director at Virgin Money, said: “All businesses, whatever their size or industry, should be thinking about their approach to sustainability, ensuring that any future growth strategy takes into consideration the ESG impact of their operations. This isn’t an easy task, but those that do so often find new opportunities and we are committed to working with our customers and partners, like Life Moments, to provide the support and insight that allows them to work towards becoming a more sustainable business.”
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