Peter Wannemacher, Principal Analyst

Show Notes:

The concept of automated financial services isn’t new. Some investors have trusted outside advisors and firms to directly manage their finances for generations. But will they put that same trust in an algorithm?

On this episode of What It Means, Principal Analyst Peter Wannemacher discusses the latest technology behind autonomous finance, as well as the issues of trust that accompany it.

What makes automating financial services different from automating other business areas? Wannemacher points out that 55% of Americans trust an algorithm to provide them with correct driving directions over another human. Yet, “Interest in and trust in automated investment managers — robo-advisors — is pretty low for all generations and segments,” he says. “That reflects humans’ concern or caution around something they don’t understand.” Not surprisingly, trust of autonomous finance varies greatly by generation.

When it comes to the comfort vs. risk equation, Wannemacher explains that there are various financial services that can be automated as entry points. He describes algorithms that select the right credit card or insurance policy from established providers as examples. But how far are consumers willing to let those bots go into their personal finances?

Listen to learn where this unique combination of emerging technology and finance is headed.