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Personal Finance Survey Reveals that 67% of Individuals Trust Robots More than Humans to Manage their Investments

We’ve been trusting robots to manage money more than we “trust” ourselves, according to a recent study from Oracle and personal finance specialist Farnoosh Torabi. The global survey of over 9,000 individuals across 14 different countries revealed that the COVID-19 pandemic has “increased finance-related stress at home and in business, and people around the world are looking to AI for help.”

The Oracle study found that financial anxiety and sadness among individual consumers and business owners or leaders “more than doubled (increased by 103%) in 2020.” Notably, the study revealed that 67% of people “trust robots more than humans to manage finance.”

Around 85% of survey respondents “believe robots will replace finance professionals and 46% believe it will happen in the next five years.” Around 85% of business leaders “want help from robots for finance-related tasks.”

People are also “rethinking the role and focus of corporate finance teams and personal financial advisors,” according to the research.

Other notable results from the survey include:

  • Consumers want personal financial advisors “to provide guidance on major purchasing decisions such as buying a house (45%); buying a car (41%); and planning for retirement (38 percent).”
  • 60% of consumers “say the pandemic has changed the way they buy goods and services.”
  • 72% of consumers “say the events of 2020 have changed how they feel about handling cash, with people feeling anxious (26%); fearful (23%); and dirty (19%). More than a quarter (29%) of consumers now say that cash-only is a deal-breaker for doing business”.
  • Businesses have been “quick to respond as 69% of business leaders have invested in digital payment capabilities and 64% have created new forms of customer engagement or changed their business models in response to COVID-19”.
  • 51% of organizations are “already using AI to manage financial processes, compared with 27% of consumers”.
  • 87% of business leaders “say organizations that don’t rethink financial processes face risks, including falling behind competitors (44%); more stressed workers (36%); inaccurate reporting (36%); and reduced employee productivity (35%)”.

As noted in the update shared with CI, managing finances can be challenging during the best of times, and the financial “uncertainty” due to the COVID-19 pandemic has further exacerbated financial challenges at home and at work, according to Farnoosh Torabi, personal finance expert and host of the So Money podcast.

Torabi added:

“Robots are well-positioned to assist – they are great with numbers and don’t have the same emotional connection with money. This doesn’t mean finance professionals are going away or being replaced entirely, but the research suggests they should focus on developing additional soft skills as their role evolves.”

Research Methodology

Research findings are “based on a survey conducted by Savanta, Inc. between November 10 – December 8, 2020 with 9,001 global respondents from 14 countries (United States, United Kingdom, Germany, Netherlands, France, China, India, Australia, Brazil, Japan, United Arab Emirates, Singapore, Mexico and Saudi Arabia)”. The survey “explored attitudes and behaviors of consumers and business leaders towards money, finances, budgets, and the role and expectations of artificial intelligence (AI) and robots in financial tasks and management.”

Juergen Lindner, SVP, Global Marketing, Oracle, remarked:

“Financial processes in our personal and professional worlds have become increasingly digital for many years and the events of 2020 have accelerated that trend. Digital is the new normal and technologies such as artificial intelligence and chatbots play a vital role in managing finance. Our research indicates that consumers trust these technologies to accelerate their financial well-being over personal financial advisors and business leaders see this trend reshaping the role of corporate finance professionals. Organizations that don’t embrace these changes risk falling behind their peers and competitors; hurting employee productivity, morale and well-being; and struggling to attract the next generation of AI-empowered finance talent.”

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Cashplus Approved for Full Banking License

UK-based Fintech Cashplus has received approval to become a regulated bank after operating as an e-money institution for many years. Cashplus has worked for a couple of years to gain the license and has recently indicated it is now authorized by the Prudential Regulation Authority (PRA).

Cashplus is the latest Fintech to emerge as a digital bank as these companies seek to compete with incumbents and other digital banks. Cashplus posted a page on its website indicating the transition with few immediate changes.

One update of note is that deposits will now fall under the Financial Services Compensation Scheme (FSCS), which protects accounts by compensating customers up to £85,000 if financial firms like banks fail.

Cashplus said they intend to improve services and offer more features for its users. In fact, Cashplus claims to be the first non-bank to offer a current account, offering innovative solutions “long before the new guys showed up.”

After being in business for 15 years, Casphlus reports about 1.6 million customers. While smaller than the rest of UK digital banks, Cashplus has differentiated itself by pursuing profitability before steroid-like growth having generated an operating profit for the past 9 years. Revenue for the period ending March 2020 was around £48.5 million.

So will slow and steady win the race? Will the new banking license help to boost deposits and users including its SME business? We will learn more in 2021.

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Fintech Adoption in Pakistan and Digital Transformation Supported by Local Fintechs Could Improve Tax Collection: PM Imran Khan

The team at Islamabad-based Fintech firm SadaPay has been introducing innovative and appealing financial products and services that are focusing on younger consumers in Pakistan.

SadaPay is offering black, sleek premium spending cards which may be comparable to some of the cards offered by European Fintech challengers such as Monzo or Starling.

SadaPay has also launched a Founder’s Club and allows its clients to get their hands on these premium black cards if they can get 10 of their friends or colleagues to register to use the company’s Fintech services.

SadaPay, which was recently approved by the State Bank of Pakistan to launch pilot operations, points out that Payoneer’s Global Gig Economy Index revealed that Pakistan was among the top freelance markets, even surpassing India, Bangladesh and Russia last year (following the COVID-19 outbreak).

The report from Payoneer confirmed that the United States saw the most growth at 78%, followed by the United Kingdom at 59%, Brazil at 48% and Pakistan following closely at 47%.

In Pakistan, there’s also a young workforce that is increasingly using digital banking and online payments services like EasyPaisa and JazzCash to settle daily transactions. The COVID-19 pandemic has accelerated digital transformation in Pakistan and neighboring countries like India and Bangladesh as well.

Last month, Pakistan’s Prime Minister Imran Khan said that the Digital Pakistan initiative would help move the country away from a cash economy, which has become even more relevant in a post COVID world.

Prime Minister Khan had stated in January 2021 that the Digital Pakistan initiative would help the nation transition to a more modern economy. The premier, whose comments came at the launch ceremony for the ‘Raast‘ payment system in Islamabad, noted that the initiative could potentially play a key role in eradicating poverty in the country with a GDP of nearly $400 billion.

The Prime Minister remarked:

“Cash economy is an obstacle for the people.” 

He added that digital transactions will help Pakistan on its journey to prosperity. He also pointed out that tax collection is extremely low in the country and that out of the 220 million residents, just 2 million are paying their taxes.

He further noted:

“Only 3,000 Pakistanis pay 70% tax.” 

Khan explained that the low tax collection rate has been a significant challenge or obstacle in the country’s ongoing development.

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Frontline Ventures, which backs B2B SaaS Firms with Dublin, London, San Francisco Offices, Launches New €70M Fund

Frontline Ventures, which supports several different Fintech companies including alternative lending platform Linked Finance, has introduced a €70 million fund.

Frontline has also been backing Fintechs such as Clearbanc and Currencyfair.

Frontline Ventures’ new fund includes strategic investments from the European Investment Fund, the Ireland Strategic Investment Fund and Irish banking platform AIB. All of these organizations have previously backed funds established by Frontline. It also reportedly includes 10 exited software entrepreneurs based in Europe and the US, the company confirmed.

Launched in 2012, Frontline’s latest fund brings its total assets under management (AUM) to €250 million. The company’s other seed investments include Logentries (now acquired by Rapid7), Orchestrate (has been acquired by CenturyLink), and Pointy (which was acquired by Google or Alphabet Inc last year).

William McQuillan, partner at Frontline Ventures, stated that the interest in European startups is growing, including the US markets, however, the global expansion efforts of these initiatives are still in their early stages.

McQuillan added:

“When we looked at the data back in 2012 – at the very start of Frontline – it was painfully clear that European entrepreneurs lacked the infrastructure and support to build a global business out of Europe. Today, Europe rightfully finds itself on top-tier US investors’ target list, but global expansion remains an important challenge to solve. As a team, we’ve pooled all of our experience and resources into helping our founders cross the Atlantic. Seed Fund III will be an extension of our work – to help founders get off the ground – and go global.”

Several other established US VC companies have now also expanded their business operations into European markets such as Sequoia which launched a new office in London in 2020.

McQuillan added:

“The US accounts for 52% of the global software market, and Europe accounts for a further 26%. To become the global category winner, companies of all stages need to compete and win, in both. Our job is to facilitate their growth by adding more than capital alone.”

As noted on its official website, Frontline backs B2B software-as-a-service (SaaS) firms with “international ambition.” The company says that if you’re an early stage startup with sights on the US markets, or at a later stage “looking to the rich potential” of Europe, they can assist you with “getting where you want.”

The firm’s packages include:

Frontline X, which is appropriate for founders of a “successful” B2B software firm based in the US  and also if you’re a growth stage business and have raised “at least $10m to date” and are  planning to expand into European markets in the “next 12 months.”

Frontline Seed is appropriate for “ambitious” entrepreneurs in tech, engineering, or computer science and if you’re based anywhere in Europe “at pre-product, pre-seed or seed stage.” Also, you may be planning to expand and see the US “firmly” in that future plan.

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Huobi Global Partners with BCB Group to Better Globalize Offerings

Huobi Global has partnered with BCB Group, to “better globalize” its offerings, according to a release. Huobi is a large digital asset firm based in Asia.

BCB Group is a payment services provider that enables clients with European fiat the ability to send fiat to crypto counterparties via “BLINC” in real-time, 24/7, 365 days a year.  BCB Group is a multi-jurisdictional regulated cryptocurrency service firms managed by an executive team have that has worked for incumbent financial services firms. BCB currently serves clients including Bitstamp, Coinbase, Galaxy, and Kraken. BCB Group provides payment services in 20+ currencies, FX, cryptocurrency liquidity, and digital asset custody.

Huobi states that working with BCB will enable it to bank its OTC desk with the firm as well as let them handle foreign exchange flow.

Ciara Sun, the VP and Head of Global Business at Huobi commented on the arrangement:

“We understand the importance of both a compliant, and streamlined service. Partnering with BCB allows us to offer a European fiat on and off ramping service that we know is in line with the laws of that area, but it also allows our customers in Europe to experience a smooth and hassle-free user experience.”

Oliver von Landsberg-Sadie, founder and CEO of BCB called the partnership important in furthering BCB’s mission to “promote future-friendly growth of the industry.”

“We are excited to play a part in Huobi’s global project.”

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