Table of ContentsIntroductionDigital Transformation, AI and Robo-AdvisorsRobo-Advisors and FinTechThe Beginning of FinTechHigh Demand for ETFs and Robo-AdvisorsConclusionIntroductionRobo-Advisors are Solutions automated investment tools that actively engage individuals with digital resources and tools to guide them in their investment decision by creating and managing their portfolios through algorithmic techniques. The role of advisors has been established over the last 40 years that the best way to get a higher return on investments is to involve a human being to get the best financial advice. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get the original essay Robo-advisors are the new revolutionary advancement for banking. This new entry barrier has entered the market due to demographic change and emphasis on generational shifts. Therefore, the demand for digitalization of the banking system and all financial services is increasing as technology changes the nature of the banking sector. Digital transformation, AI and robo-advisors You can already see artificial intelligence on your smartphones, every time you use Siri or ask Alexa a question, every time you use your sat nav you are using algorithms, AI recognizing your word and giving you search results. According to scientists, “AI is the new electricity”. Imagine when electricity powers everything you do, with AI, but it empowers the way you live. How did artificial intelligence become possible? There are four exponents of the rise of AIComputing performanceBig dataAdvanced algorithmsIncreasing funding from businesses and scientific research to implement AI. Machine learning is a version of AI focused on teaching programs to learn. It is the level of intelligence that keeps growing by storing big data and, with a narrow focus area, it actually exceeds human performance. Intelligence has many attributes and having a lot of intelligence and the ability to calculate quickly would contribute immensely to the advancement of automation. The advantage of having a computer smarter than anyone else in stock trading would give the individual a distinct advantage. With the rise of technological disruption, AI will automate not only physical tasks, but also thinking ones. Automation is progressing around the world. In the case of financial planners, it is estimated that 15% of their average time is spent on tasks that can be performed by AI. A financial planner's argument would say that AI can't take over talking to your clients. The misconception many have about artificial intelligence is that everyone talks about automation as destroying jobs, the reality is that automation is changing the way we do our jobs. In fact, AI does things much faster than an average human, less error-prone, and much more cost-effective. Using machine learning capabilities, we teach these algorithms how to learn trading techniques and methodologies, and then the algorithms themselves leverage the optimization techniques to extract insights that would not otherwise be possible by leveraging sense alone. human. The importance of big data for machine learning algorithmsto be effective, they need a lot of data. It is considered the new oil as businesses embrace digital transformation. Data ownership is very important to businesses as they learn more about the customer over time.Robo-Advisors and FinTechWhat is Robo-advisory? New trends in wealth management have emerged for financial institutions that leverage customer information with algorithms to create and develop automated portfolios and investment strategies and recommendations. This new development has created a new term called “Robo-Advisors”. With this new development, financial companies have seen considerable growth in shifting investment dollars to the robo-advice platform. Robo-advisory is an automated investment advisory platform that provides algorithm-based advice at a very low cost and without human intervention. The whole concept of this technology is based on algorithms that can provide logical financial advice at low cost compared to what human advisors charge without any bias. Robo-Advisors target any client without a selection and pre-selection process independent of their asset status. The niche that Robo-Advisors operate in is serving younger clients who don't necessarily have thousands of dollars to invest or serving a clientele that wants to reduce their costs and is looking for ways to save without having to do so. . fork out the high cost of commissions to pay a financial advisor. Millennials have taken advantage of this low-cost wealth management software platform, reforming financial markets and driving change. Can robo-advisors understand emotional responses? AI algorithms are much more reliable than humans. The argument is that people are not transparent in the same way that an AI algorithm is. The human factor in replacing human brokers with Robo advisors is about human interaction. Many Robo investing platforms do not have a track record of performance or data on how to limit downside exposure. The client may have limited control over asset allocation and fund choices. There are many questions about how this platform can protect the customer from panic sales or excessive transactions. The beginning of fintechFinancial advice will be accessible to everyone through digital onboarding, digital relationships and digital engagement. Many companies are jumping into the Robo-Advisement business and ultimately understanding that it is the future of investing. The client registers for the online service by providing information about their investment objectives, income and risk tolerance. The computer software uses this information to choose the client's investments or to monitor the client's portfolio behavior to produce a very detailed risk model. An automated app for robot investors that asks you many questions such as age, income, investment style, risk. tolerance, etc. Based on the answers, it will build a profile with a combination of portfolios such as stocks, bonds. This app is suitable for users who do not want to go into detail about what they are investing. Betterment is an automated investing and 100% passive investing platform with no minimum deposit. The investment is made in ETFs (Exchange Traded Funds) where it follows a.