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Opinion

Robo-advice: in the wake of the FCA review, here’s the problem that no one is talking about

By May 25, 2018No Comments

This week’s FCA review of Automated Investment Services (“robo-advice”) emphasised once again that debate on this topic is still yet to mature from the regulatory and technical phase i.e. what the product is and what it does. But for those investing in robo-advice – and relying on it finding popularity with end users – the focus now needs to shift to understanding how those end users feel about the experience of actually using the product.

The gap in the understanding of robo-advice

As far as I can tell, there has been little in the way of in-depth analysis of real customers’ moment-to-moment experience of using robo advice tools. This is an issue that will only grow larger as we move forward – and if robo-advice is to be the robust and long-term solution to providing cost effective advice to the mass market that businesses are seeking, then understanding what works and what doesn’t about the experience of using it is critical.

The current focus on regulatory, service and technical models will undoubtedly resolve the delivery issues and make the offerings FCA-proof – but this will have no bearing on whether individual consumers will actually engage with the tools.

In other words – the operation could be a success but the patient could still die!

Why this matters

Customer experience is now more vital than ever to a product’s chances of success – a study of 10,000 US consumers by Tempkin Group revealed that 77% of customers who were likely to recommend a product would need to consider the experience of using that product as ‘Excellent’, while 79% would need to consider an experience ‘Excellent’ in order to be likely to trust a product.

It’s important to note that customer experience isn’t to be confused with user experience, which focuses simply on the interaction with the system. Customer experience is more holistic and encompasses customers’ cognitive, emotional, social and physical responses to using a product – taking into account aspects the provider can control (e.g. service, interface, results etc.) and those they can’t (e.g. influence of others, environmental factors, moods, etc.).

Why no one is talking about it

For these reasons, customer experience isn’t simple, and it’s not easy to do well – so it’s perhaps little wonder that the current robo-advice focus tends to be on more quantitative and regulatory aspects.

The trouble is, getting the customer experience right is critical to robo-advice becoming genuinely mass market, and we are fast approaching a point where those investing in and promoting the use of robo-advice cannot afford to sideline it any longer.

The solution

For those building, investing or promoting the use of robo-advice products, how can they ensure they’re on a path to a product which provides a positive user experience?

The answer is to ask the users themselves, by conducting direct customer research. Not just in terms of usability, but by observing, interviewing and interacting with consumers before, during and after the product experience, exploring not only what they do but why they do it, and understanding why their perception of the product is good, bad, or indifferent.

Such research has been proven to be hugely effective and reliable when undertaken with small groups of participants in similar fields, and the results provide clear insight on what the consumer actually experiences – as well as how any potential issues can be resolved.

Next steps

In time I hope the FCA will move on from the technical aspects and begin to take a view on customer experience in robo-advice – but in the meantime those who are relying on its success might wish to consider how much true understanding of the customer’s experience they really have.

But customer experience research is not an amateur activity – our team of psychologists, anthropologists and ergonomists are highly skilled in creating the right interview question sets and establishing the correct environmental setting in our labs.

Get in touch with us to discuss how we can assist with testing and improving your robo-advice product and your customer’s experience.     

 

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