The use of robo-trading in financial services has risen considerably in recent years.  Advocates argue that machines are more rational and better traders and advisors than hot-blooded humans.  New research from Swansea University explores how people feel about handing over their finances to a machine.

The study is the first to explore how happy people are to adopt AI-based advisory services in banking.  The study suggests that our predilection for such services depends to a large extent on our taste for human interaction, to begin with.

Robo-advice

The researchers focused their attention on robo-advisory services, which provide AI-based investment advice to clients on automated investment platforms.  The interactions typically have no involvement from a human advisor.

The researchers analyzed data from 11,000 customers of the ING Bank from 11 countries.  The data revealed that the attitudes and cultures across each country played a big role in their likelihood to accept the robo-advisors.

There was a higher likelihood of adopting robo-advisory services when there was also a general lack of trust in human advisors.  If people didn’t believe that humans would be reliable and trustworthy then they were happy to turn to machines instead.  This was also the case if there was a strong fear that they might be cheated in some way.

By contrast, in cultures where social interaction was considered an important part of life, the acceptance of robo-advisory services was less welcoming.

“There is some special value that people place on human interaction in services, which an AI-based service simply cannot substitute. Even when using a classical economic model for the adoption of innovation, such as the model by eminent economist Arrow and co-authors (previously used for understanding the adoption of new medicines), we see that the value of human interaction shows a clear importance for the AI customer in the service sector,” the researchers conclude.