Expect banks to break into roboadvice

The big four banks may be exiting wealth management but it is likely they will enter the roboadvice space in the future, according to roboadvice firm Six Park.

Speaking to Money Management, Pat Garrett, Six Park co-chief executive, said he did not expect banks would want to give up the space to newer entrants.

“It is highly unlikely that the banks, that have this ability to address an enormous consumer market, are going to let other people serve them financial services instead,” Garrett said.

“When they say they are getting out of wealth, they are just stepping back in order to figure how to come back in the right way. What I think you’ll see is banks returning through technology-led services for the mass market.

“You can already see with what CBA [Commonwealth Bank] are doing, they are building digital platforms.”

Commonwealth Bank already ran online share trading and investing platform CommSec and simple investing app CommsSec Pocket and last week, made its first foray into cryptocurrency by announcing it would make 10 currencies available on its app.

Garrett said digital services had moved from being “nice to have” for consumers to something that was a “need to have” for them.

“That is already accelerating, all because of COVID-19 which isn’t necessarily the right reason because it shouldn’t take a pandemic to get people to start investing and trading. But now the Government and the regulators are looking at it,” he said.

“What you are going to find is a hybrid amalgamation of digital products and services, plus the intervention of a human when appropriate, through an efficient delivery mechanism.”

Six Park offered advice and statements of advice (SoA) to its users but Garrett disputed it was a threat to financial advisers. Instead, he said he wanted the service to be “complementary” to what advisers were offering and offer an alternative option for those clients which weren’t cost-effective for advisers.