Consolidation is on the horizon in the robot market

20 October 2015

We have come a long way since the launch of the ZX Spectrum, the 8-bit personal home computer released in 1982. Today, the computer chip in a modern phone has more processing power than all the computers combined in 1945.

Technology surrounds and drives our daily lives, while media coverage on ‘futuristic’ developments such as driverless cars, the internet of things and robot workers give us a window into tomorrow’s world. Most recently, we have seen a lot of coverage looking at the jobs that robots will ‘steal’ first. A recent report from A.T. Kearney predicted that by 2020 robo-advisors will manage about $2.2 trillion in assets, while a Boston Consulting Group predicted that up to 25 per cent of (industrial) jobs could be replaced by robots or software by 2025, but is this a sign of the future or are we there already?

Artificial intelligence algorithms are already commonplace on Wall Street, particularly in the institutional space, but are now being used as the basis to develop the next generation of robo-advisor retail investment solutions in the US. Companies such as Digit and Acorns, which automatically invest spare cash in to savings and investment accounts, have already made strong inroads into this area, but it is not just at the start-up level.

Artificial intelligence

These companies are being joined by powerhouses such as IBM that are specifically targeting the financial advice segment with their powerful super computer Watson, which famously beat the champion human competitors at a gameshow called Jeopardy. Other technology leviathans, meanwhile, such as Facebook, Google, Amazon, Microsoft, Apple and Baidu in China are outspending all others on artificial intelligence for the next generation of products for their massive customer bases. Interestingly, the majority of these firms are already in the financial services space, mostly in FX or payments but it’s almost inevitable that they will move further up the food chain from here.

One of the key concerns however is just how many of the new start-up companies/technologies will still be around in a few years’ time. Regulation, the pace of innovation and the capital requirements involved with staying at the forefront of development, all suggest that the best start-ups will almost inevitably need to grow very quickly or secure the backing of a BlackRock (which recently announced the acquisition of FutureAdvisor that creates automated portfolios for investors), an IBM or similar to stay ahead of the game.

To this end we expect to see further significant consolidation similar to the technology hungry companies such as Facebook, which acquired Whatsapp and more than 40 companies in the past few years, and Apple, which has announced more than 70 acquisitions to keep its propositions ahead of the competition. Like with internet banking however, the challenge will be keeping the pace of technological change at a level where consumers can keep up.

Jet Lali, Alpha Financial Markets Consulting

Change is coming rapidly and we expect to see the next generation of automated robo-advisors coming online in the retail fund space in the next 12 months. These will have improved algorithms not just based on self-disclosed risk profiles and objectives but also leverage behavioural data such as spending patterns and investment habits to help validate assumptions and make more tailored investment decisions. For instance suggesting or moving surplus money from low yielding accounts to better performing or more tax efficient vehicles.

These robo-advisers will start to provide personalised advice based on large data sets that would be inefficient or costly for human advisors to do. As with all rapidly developing technology, the important thing to remember is that what we have now is the worst that we’ll ever have, what will come next will only continue to improve.

An article from Jet Lali, head of digital at Alpha Financial Markets Consulting.

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Two thirds of UK employees not empowered enough to innovate

18 March 2019

A culture of equality can drive innovation at work, but only a third of UK employees feel empowered to innovate at present. This demonstrates a significant disconnect between workers and their bosses in the UK, with 76% of business leaders also claiming they empower employees to be innovative.

Despite innovation increasingly being seen as integral to the survival of businesses, innovation remains relatively difficult to achieve. A lagging disconnect between management and staff remains the driving force behind this. One study by PA Consulting previously confirmed that while 66% of companies believe they will not survive without innovation, only 24% said they had the skills needed for that, and only half thought they had the right leadership in place to change that in time.

In order to find a way around this problem, global consultancy Accenture has completed its own study into innovation, polling around 700 bosses and workers across the UK to do so. The key finding of the research is that companies with a culture of equality can see an individual’s willingness and ability to innovate improved by seven times that of the least equitable workplace cultures. At the same time, an innovation mindset is almost twice as high in the most-equal companies as in typical ones.

91% of employees want to innovate but just 34% in typical United Kingdom companies feel empowered to

What remains clear, however, is that most companies are failing to adequately create an equal culture, where staff of all ranks feel comfortable contributing new ideas. 91% of employees want to innovate but just 34% in typical UK companies feel empowered to. That is higher in the most equal companies, where 75% of staff feel confident making suggestions, compared to just 5% of the least equal, and 34% of typical companies. Since those equal companies are comparatively fewer, when averaged out, only a third of UK staff feel they are empowered to innovate.

That figure stands in stark contrast to the perceptions of UK executives, however.  76% of business leaders in Britain believe that they do indeed regularly empower their employees to innovate. As a result, it seems that leaders mistakenly believe that some circumstances encourage innovation more than they actually do. For instance, they overestimate financial rewards and underestimate purpose.

The opportunity which is presented by addressing this divorce is enormous. Accenture calculates that global gross domestic product would increase by up to £6 trillion over 10 years if the innovation mindset in all countries were raised by 10%.Top 10 workplace culture factors - by strength of impact on innovation mindsetAccording to Accenture, the best way to impact positively on a company’s innovation mindset is through the provision of relevant training – associated with a 10.5% uplift to staff’s confidence innovating. Allowing the freedom for employees to be creative followed, contributing an 8.1% boost, while ensuring that training times are flexible and the firm allows a healthy work-life balance both see a more than 7% improvement. Similarly, remote working being available and being common practice will buoy creativity by 6.9% – further demonstrating the importance of flexible working to improve innovation culture at a firm.

Commenting on the report, Rebecca Tully, executive sponsor for Human Capital and Diversity for Accenture in the UK and Ireland, said, “Our research reveals that a workplace culture of equality is an overlooked driver of innovation within companies. By understanding what motivates their employees and fostering an environment where people feel empowered, business leaders have the opportunity to unleash the innovation required to compete effectively in an era of disruption.”

The research came as part of a global survey by Accenture, which queried more than 18,000 professionals in 27 countries and 150 C-suite executives in eight countries. The overall research determined that an empowering environment is by far the most important of the three culture-of-equality categories in increasing an innovation mindset, which consists of six elements: purpose, autonomy, resources, inspiration, collaboration and experimentation. The more empowering the workplace environment, the higher the innovation mindset score.