As more and more algorithms take actions on consumers’ behalf, people’s lives are becoming ever more automated. Research company Forrester wrote an inspiring report, in which they look at the driving forces behind autonomous finance and its future. We’ll share the most important takeaways with you.
Forrester highlights 3 drivers that are pushing forward algorithm-driven financial services:
At FINN, we are specialised in autonomous IoT payments. Forrester’s report covers a wider concept: autonomous finance. The research company believes autonomous finance is the next generation of financial services. They define it as ‘algorithm-driven services that make financial decisions or take action on a customer’s behalf.’
Autonomous finance promises better financial outcomes for customers and will transform the industry’s competitive landscape.
Customers trust in automated financial services doesn’t grow overnight. It’s a process that customers need to go through. The more experience they have with automated services, the more they start to trust computer algorithms to make good financial decisions on their behalf.
According to Forrester, customers appetite for autonomous finance is on a rise. People are starting to trust automated services for everyday activities and financial tasks. They are ready for better financial services. According to Forrester’s research, they are:
A synergy between a host of maturing technologies is bringing autonomous finance to a whole new level — enabling more personalised financial coaching and embedding automated financial services into the customer’s environment.
Autonomous finance lets customers decide how involved they want to be in managing their finances and which aspects of their financial lives they want to automate. Autonomous finance delivers personalized recommendations and advice to customers, who can choose either to explicitly act on this advice or allow algorithms to take action on their behalf.
Forrester expects autonomous finance to evolve through four levels, in line with maturing technology and growing customer adoption. Have a look at those levels in the image below:
Different industries, markets and segments will mature at different speeds, and some consumer use cases will exist primarily in a particular level for years at a time. It is expected the next five to seven years will all be about earning trust in financial automated services by helping customers.
Forrester expects autonomous finance to redefine the financial industry. The research company points out autonomous finance will demand a solid roadmap for product innovation, technology, skills, and partnerships. If you offer financial services to you customers, Forrester advices you to start by identifying one autonomous finance experience. Why? Forrester explains the steps you should follow:
Align business objectives with improving customer outcomes to establish trust
Consumers will be wary of giving up their data and control over their finances if they don’t see the benefit.
Focus on a single experience to build customer comfort and capabilities
Start experimenting in single product areas or experiences today. Identify a pain point and iteratively test solutions in this space.
Build an MVP, then test and measure obsessively
Success will come from an ongoing system of experimentation, measurement, and iteration.
Beef up data and model governance
Machine-learning models are only as good as the data you use to train them. Autonomous finance drifts heavily toward guidance. That’s why legal and compliance need to be deeply versed in the platform.
Develop robust recourse mechanisms
Because you also need to plan for when things go wrong.
At FINN, we always keep a close eye on the way things are shaping up. In this article, we’ve added our own learnings to the insights coming from Forrester’s research. Also, our very own Team Lead Pim Stolk was interviewed by Forrester for this research report!
Interested in our take on the latest trends and innovations? Call us at +31(0)20 22 51 608 or send an email to FINN@ING.nl. Let’s build something new today!
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